Citi has invested in Cobalt DL, an FX post-trade processing network based on distributed ledger technology. Citi is also a client for the Cobalt FX post-trade solution.
Cobalt DL has begun a beta test for its private peer-to-peer network that uses distributed ledger technology (also known as blockchain technology) designed to reduce risk and cut post-trade costs by up to 80 percent. Cobalt DL’s FX solution is set to launch in 2017, with 15 institutional participants committed to using the service.
Cobalt DL designed the technology to integrate seamlessly with all trading sources and venues, offering immediate efficiency benefits, which has been shown to deliver a significant cost reduction compared to existing infrastructure.
FX market participants typically incur multiple license fees, ticketing charges, IT overheads and staff costs on account of the complexity of existing structures.
From a single transaction, existing infrastructure provides multiple trade records for buyer, seller, broker, clearer and third parties. In developing a single, shared view of a transaction, Cobalt DL frees up the back and middle office resources that are typically overwhelmed by having to manage continuous reconciliation across multiple systems.
“We have been impressed with the way Cobalt DL is redesigning the post-trade FX infrastructure with its practical implementation of distributed ledger technology,” said James Bindler, global head of G10 FX at Citi, in a prepared statement. “The Cobalt DL solution has the potential to significantly improve post-trade services by cutting costs and reducing risk for our industry.”
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Charlotte Crosswell, former Nasdaq NLX CEO, has joined Cobalt DL as a strategic advisor with a focus on strategic partnerships.
“I am delighted to be joining Cobalt DL at such an exciting time for the company and the industry,” Crosswell said. “With continued scrutiny on efficiencies within the FX post-trade arena, I believe Cobalt DL is extremely well positioned to drive the changes we expect to see in this industry and deliver on real cost savings for market participants.”
“We have set out to radically improve the FX post-trade landscape by removing inefficiencies, duplicative legacy infrastructure and processes, as well as reducing significant costs and risks,” said Andy Coyne, co-founder of Cobalt DL. “As we stand at a point of change for the FX post-trade landscape, we are delighted to welcome Citi as one of our investors and as an active market participant when we go live.”
Image from Wikimedia and Cobalt.