A 'blockchain inspired' post-trade peer-to-peer network co-founded by the former CEO of Traiana Andy Coyne, is to commence beta testing with eight institutional FX market participants following successful proof-of-concept trials.
Cobalt DL is moving out of stealth mode following a year of design and testing and completion of a proof-of-concept with "one of the largest FX market making banks".
The firm, which has picked up an equity investment from technology partner First Derivatives, says it plans to launch in 2017, with eight leading institutional FX participants already committed to the service.
Cobalt DL utilises blockchain-derived concepts of encryption, digital signatures and consensus to deliver a single, immutable record for each trade. This is in contrast to current market practices which spit out multiple trade records for buyer, seller, broker, clearer and third parties.
By creating a shared view of trade data, Cobalt says it will free up back and middle office resources from multiple layers of reconciliation and eliminate swathes of costs from back office processes.
Andy Coyne, Cobalt DL chief executive, comments: “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.”
Coyne's former employer Icap recently completed a proof-of-concept test on the use of distributed ledger-based smart contracts on Traiana's Harmony network, declaring that the technology has the potential to "significantly transform post trade operations".