Reaction to FCA and BOE Post-trade Working Group

  • Adrian Patten, Co-founder and Chairman at Cobalt

  • 10.05.2019 11:00 am
  • Post-trade

It’s positive to see the FCA and Bank of England take an interest in issues with current post-trade infrastructure and look at the cost and benefits of alternative approaches.

Post-trade FX today relies on cumbersome, manual processes and aged technology which pose significant operational and systemic risk to the FX market. A single FX trade today creates multiple records for all parties, introducing inconsistencies throughout lifecycle events. We predict one trade can be replicated over 30 times within post-trade operations today and that there can be 20+ vendors involved in the process. This adds unnecessary complexity, cost and mistakes.

FX market participants realise the risk associated with the current state of post-trade infrastructure and service providers and have wanted a solution for years. The answer lies in technology which wasn’t available 15 years ago when current post-trade processes were designed. Shared ledger technology matches all versions of a trade into a single ‘trusted copy, freeing up back and middle office resources from multiple layers of reconciliation; generating one immutable data set of FX transactions from which to provide multiple services. Not only does this reduce risk, it also can create savings of up to 80%.

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