Cobalt, Baton Systems to streamline post-trade FX processing

By Sunniva Kolostyak

Foreign-exchange and digital asset infrastructure provider Cobalt has entered a partnership with Baton Systems, the provider of post-trade solutions for capital markets, to provide an end-to-end FX settlement solution.

The FinTechs intend to combine Baton’s payments infrastructure with Cobalt’s middle office platform, leveraging the strengths of each system to reduce risk and increase speed and efficiency for the industry.

Darren Coote, CEO of Cobalt, said in a statement that the FX industry is ‘rife with opportunities for modernisation’, but legacy systems lag behind much of the financial services industry in terms of innovation.

“By combining our middle office platform with Baton’s payments infrastructure, we are delivering a more efficient settlement system that is not marred by high cost, antiquated technology and other restriction,” Coote said.

Arjun Jayaram, CEO of Baton Systems, added: “In 2020, the increased market volatility exposed the underlying issues with liquidity, operational infrastructure and settlement that have hindered the industry for decades. By integrating our real-time PvP FX settlement process with Cobalt we can deliver improved visibility and control over the settlement process to a new segment of the market, eliminating many of the systemic risks currently plaguing the industry.”

Cobalt has developed a middle-office platform capable of creating a single standardised version of each transaction which enables clients to connect and automate their FX processing functions. Including confirmations, trade netting, and the management of credit relationships. With its unique ledger, Cobalt cuts its clients’ risk and helps them achieve faster settlement.

Baton’s payments infrastructure integrates with financial institutions’ current collateral and cash systems while leaving their existing business processes, systems, and ledgers in place. It then provides a customisable software workflow engine to coordinate among multiple systems and institutions, achieving improved and efficient settlement by moving real assets in real accounts, along with instant reconciliation and reporting for all parties.

Earlier this month, Standard Chartered went live with Cobalt’s brokerage services.