Cobalt enters beta-testing phase with DL platform

Financial technology start-up Cobalt DL has entered the beta-testing phase as it gears up for launch in 2017, with eight institutional market participants committed to the service that uses distributed ledger technology for post-trade processes.

The private peer-to-peer network aims to cut "billions of dollars" in costs that participants face due to the highly resource- and work-intensive post-trade processes, many of which rely on antiquated and legacy technology.

"From a single transaction, existing post-trade infrastructure creates multiple trade records for buyer, seller, broker, clearer and third parties. By creating a single, shared view of a transaction, Cobalt DL frees up back- and middle-office resources that are currently overwhelmed by the need for continuous reconciliation across multiple systems," the company said in a press release.

It is understood that one of the main potential beneficiaries of the service could be prime brokers, whose operations require the processing of an extremely high volume of confirmations. The beta phase follows a year of design and testing, and a successful proof of concept.

Cobalt DL's combination of market expertise and forward-thinking technology is dramatically shaking up the post-trade space and significantly reducing costs for market participants
Andy Coyne, Cobalt DL

"FX market participants incur multiple unnecessary licence fees, ticketing charges, IT overheads and staff costs as a result of the complexity of existing structures," the company continued.

The technology is designed to integrate with all currently used trading sources and venues, improving the efficiency of interactions, which in turn leads to significant cost reductions for market participants.

FirstDerivatives, a global financial technology specialist, has become an investor in the platform, with Cobalt licensing the firm's big data solution, Kx technology, as a core part of it.

"The emergence of agile, sophisticated technology such as distributed ledgers has set the scene for an alternative to the inflexible post-trade infrastructure that financial market participants are forced to use today. Cobalt DL's combination of market expertise and forward-thinking technology is dramatically shaking up the post-trade space and significantly reducing costs for market participants," says Andy Coyne, a co-founder of Cobalt DL.