FX Trading (https://pixabay.com/en/stock-trading-monitor-desk-1863880/)
FX Trading

Cobalt, the FX post-trade processing network based on distributed ledger technology, has joined the BT Radianz Cloud. The latter says it is the world’s largest financial community. Organisations can now access Cobalt’s private peer-to-peer and blockchain services via highly secure and resilient Radianz Cloud connections. The intention is that firms reduce cost and operational risk.

Adrian Patten, Co-Founder of Cobalt, comments: “We recognise that using innovative technologies is key to making a cost-effective shared infrastructure a reality. It’s vital that the infrastructure used by institutions is secure and enterprise grade. We are delighted to be working with BT to make sure that Cobalt leads the pack in terms of these requirements.

Adrian Patten, Co-Founder, Cobalt (http://www.cobaltdl.com/leadership/)
Adrian Patten, Co-Founder, Cobalt

Cobalt Bluesky and DLT

Cobalt uses distributed ledger technology (blockchains) to remove cost and complexity from post-trade processing. Legacy infrastructure is duplicative, inefficient and no longer fit for purpose in evolving markets. A challenge is that a single trade creates multiple records for all parties involved. This is cimbersome.

Cobalt’s approach and technology leverages blockchain-derived concepts of encryption, digital signatures and consensus. These deliver a single, immutable record for each trade. By creating a shared view of that trade data, Cobalt frees up back and middle office resources from multiple layers of reconciliation. This speeds up processing.

Cobalt BlueSky is the shared ledger component of Cobalt’s offering. It is a repository of unique, reconciled FX contracts – notarized, encrypted and securely stored on behalf of ledger participants. As such Bluesky manages life-cycle events, risk reduction and prepares trades for settlement finality. Participants can approve BlueSky access for approved third party specialists to provide additional post trade services.

Who gains?

The Radianz Cloud links a community of thousands of brokers, financial institutions, exchanges plus clearing and settlement houses. Through a single (resilient) secure network connection, Radianz Cloud ‘members’ can access thousands of applications and services. These come from more than 400 providers. In totality they contribute to the every-day running of the global financial sector.

By joining the Radianz Cloud community, Cobalt joins those 400 providers. In doing so it gains connectivity to a global variety of financial services institutions. It can also exploit BT Radianz Hosting services which delivers managed hosting services from more than 20 data centres. Unsurprisingly the locations of these data centre are in cities where significant clusters of capital market organisations exist.

David Payne, managing director of Radianz, BT said: “Entrepreneurial fintechs like Cobalt are a growing source of innovation in the financial markets industry. By offering their services via the BT Radianz Cloud, they gain access to a ready-made market place and a commercial structure that helps them address the stringent contractual and compliance expectations of financial institutions. We’re delighted to welcome Colbalt into our cloud community.

What does it mean

With no legacy infrastructure to protect, Cobalt has taken a fresh approach to post-trade technology. It believes this is the future of financial services infrastructure: everything is ‘signed, sealed, delivered and recorded’ on an accessible, immutable blockchain.

By joining Radianz Cloud Cobalt can link to an existing financial ecosystem and infrastructure, most of whose participants have the costs and hassles of traditional post-trade processing. The common sense of the move, for both Cobalt and BT, is not in question. What is in questions is how fast the Radianz Cloud ecosystem exploits Bluesky.

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Charles Brett
Charles Brett is a business/technology analyst consultant. His specialist areas include enterprise software, blockchain and enterprise mobility tech (including metering). Specific industry sectors of interest and experience include finance (especially systems supporting wholesale finance), telecommunications and energy. Charles has spoken at multiple industry conferences, has written for numerous publications (including the London Times and the Financial Times). He was the General Chair of the bi-annual High Performance Systems Workshop, 2005. In addition he is an author and novelist. His Technology books include: Making the Most of Mobility Vol I (eBook, 2012); Explaining iTunes, iPhones and iPads for Windows Users (eBook, 2011); 5 Axes of Business Application Integration (2004). His published novels, in the Corruption Series, include: The HolyPhone Confessional Crisis, Corruption’s Price: A Spanish Deceit and Virginity Despoiled. The fourth in The Corruption Series - Resurrection - has is now available. Charles has a B.A. and M.A in Modern History from the University of Oxford. He has lived or worked in Italy, Abu Dhabi, South Africa, California and New York, Spain, Israel, Estonia and Cyprus.

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