Tag: infrastructure

infrastructure

Up and Running

As Cobalt prepares to go live, its founders reflect on the difficulty for banks to innovate like they used to, why blockchain technology in its traditional format is ill-suited to processing FX transactions and why shared infrastructure is – finally – a reality.

The first thing that Andy Coyne and Adrian Patten, the co-founders of Cobalt, are keen to emphasise is that the system that they have built is very real and is already up and running. Currently, Cobalt has live transactions from 12 banks going through the system and is due to go into full production this year. They insist that “full production” whilst a technical reality is really only when the final paperwork and vendor risk management (VRM) documents get final sign-offs.

What’s Keeping Institutional Money Away from Cryptos?

Uncertainty about regulations, a lack of trusted custodians and concerns about security are key factors that continue to deter many large financial institutions from trading cryptoassets, says Kevin Beardsley, a managing partner at B2C2.

Amongst these three factors, Beardsley cited the lack of regulatory clarity around cryptoassets as the biggest issue for these firms right now, pointing out that no major bank wants to clash with their regulators for trading in what is, relatively speaking, still a small marketplace.

“The large institutions are all waiting for the regulations to become clear, which is a very rational approach,” he says.

FinTech in FX: An Evolutionary Process

Although fintech solutions are likely to change how FX operates throughout the trade lifecycle, expect these changes to be evolutionary rather than revolutionary, explained speakers during a recent Profit & Loss webinar. 

The word “disruption” has become synonymous with fintech in recent years, with numerous articles, whitepapers and analyst reports warning that fintech upstarts are looking to upset the applecart in financial services.

Yet speakers on a recent Profit & Loss webinar, FinTech in FX: Getting Beyond the Hype, which was sponsored by IHS Markit, preferred to talk in terms of innovation rather than disruption when discussing the impact of fintech in the FX markets.

ISDA Calls for Infrastructure Standardisation

The International Swaps and Derivatives Association (ISDA) has published a whitepaper calling for greater standardisation and automation of derivatives market infrastructures.

The new paper, The Future of Derivatives Processing and Market Infrastructure, highlights a number of challenges with existing structures and processes, and recommends several steps the derivatives industry can take to create efficiencies – in particular, by embracing opportunities for further standardisation.

“The derivatives industry has become reliant on legacy infrastructures and processes that have been layered on top of each other over time. That might be the result of historical acquisitions, where the respective systems haven’t been fully integrated. More recently, the sheer pace of regulatory change has meant firms have been under pressure to tackle the next pressing deadline. The result is a derivatives infrastructure that is duplicative and based on incompatible operating standards, and this isn’t sustainable,” says Scott O’Malia, CEO of ISDA.

Is it Time to Re-Write How FX Infrastructure Works?

After a number of years having to take reactionary measures in response to new regulatory requirements, panellists at Profit & Loss’ Forex Network New York conference expressed enthusiasm for a new wave of innovation that has the potential to re-shape FX market infrastructure. “Perhaps for the first time in eight years, innovation is back on […]