The Future: FX Post-Trade
THE FUTURE OF FX POST-TRADE
An FX post-trade distributed highway. Bank-grade, secure, efficient, a place where data meets and converses in a unified language. That language is trust!
THE STATUS QUO IS NO LONGER ACCEPTABLE
Recently, the call for change has been voiced and heard on a bigger platform. The Bank of
England Market Reform Task Force launched in May 2020, with the following call to action. “The
Bank of England views the post‐trade processes that support fixed income, currency, and commodities
markets as complex, costly, and inefficient. Too many post-trade activities still rely on a patchwork of manual or outdated technological processes.”
A MARKET PROBLEM SEEKING A SOLUTION
The current FX landscape is one of extreme price competition, low margins, complex, high
frequency, and low-latency technology execution.
In post-trade, the process is reasonably common. However, the data and architecture are dis-
jointed, bespoke to each participant, and under-invested from a transformation or utilization
perspective. The number and inter-relationships between functional domains provide a high-level
insight into the complexity of the data and technology challenges. (please refer to infographic for trade lifecycle topology)
THE MARKET SHIFTS
Throughout the last three decades, the FX industry has undergone four significant environmental, technological, and business model shifts: FX 1.0 - Access, FX 2.0 - Balance Sheet, FX3.0 - Technology. We believe FX 4.0 - Data, will mark the new battleground. With the ability to utilize data as intellectual property in delivering the customer value proposition being the success determinant.
THE PRODUCT
In short, we will work with R3 members/investors to define and determine a common post-trade infrastructure to access a comprehensive spectrum of application services via secure nodal relationships.
Corda’s Distributed ledger technology brings forth the ability to atomize and make trusted, a master data set, ensuring process flows are transparent and enabling inter-connectivity.
Creating a single, multi-party utility based eco-system facilitating trusted, confirmed FX contracts postings to the respective counter-party nodes. Participants then determine which services they leverage on the ledger, from a suite of FX CorDapps, consuming the results inside their institutional walls. These services will address risk, operational, and reporting obligations, margin management, FRTB, Payment requirements, and many more.
We will build out both supply and demand creating an FX network covering a multitude of operational and reporting domains. We envision peers joining the ledger, then sponsoring their clients, with Cobalt providing FX business logic.
PRODUCT TEAM
Jenny Knott and FinTech Advisory (David Woodhouse/Gary Bailey)
Cobalt - Andy Coyne
Exactpro Systems – Iosif Itkin
R3 Bank Members Focus Group (tbc)
R3 - Angie Walker
IPC – Rob Coole
Vendor Focus Group (tbc)
- Together, these stakeholders will provide deep FX trading and post-trade domain knowledge, Industry leadership credibility, future-proof technology visionaries, Network and marketplace building experience, sensitivity to governance, regulatory and compliance challenges and a track record of developing applications/solutions and robust product road maps.