Cobalt is a startup that is based in London which is striving to drive foreign exchange (FX) markets onto blockchain technology. It now has the largest currencies exchange of Asia on board.
Today, the Singapore Exchange (SGX) made a “strategic investment” in the company, which intends to use the distributed ledger technology (the technology behind blockchain and bitcoin) to improve the infrastructure and risk management of the firms.
SGX is now an investor in Cobalt together with Citigroup, a major FX trading bank. Cobalt is currently testing a beta project with over 30 institutions including Citadel Securities and Citi.
The co-founder and chairman of Cobalt, Adrian Patten, stated: “SGX’s investment is testament to our innovative application of technology in the FX space.”
He added: “Our platform addresses pain points faced by almost every institution that trades FX: the unnecessary cost and risk associated with post-trade processing.”
The distributed ledger technology works by maintaining a record of transactions on each computer which is part of the network. Every transaction becomes verified by algorithms, and once it is recorded, it will be unchangeable and unremoveable.
Financial institutions are expecting that this kind of technology will help them in cutting costs in the long run, reducing the need for middlemen and improving the audit trail so that information can instantly be accessed by any party which will be given authority.
Henry Ritchotte, the former chief operating officer of Deutsche Bank who is acting as a strategic advisor to Cobalt, stated: “Exchanges around the world continue to invest in the critical infrastructure underpinning financial markets.
“This collaboration between a major Asian exchange and an innovative firm that has developed a unique high performance, distributed ledger technology solution is a major step forward in upgrading the systems our industry relies on to operate efficiently, safely and cost-effectively.”