Citadel Securities and XTX Markets, the electronic trading houses, have partnered with global banking giants in signing up for blockchain currency settlement venture ‘Cobalt’, as reported by Reuters.

Cobalt, based in London and was set-up by two bankers, is seeking to utilize blockchain technology in order to reduce post-trade costs in currency trading as well as speed up the time, where transactions are settled. It aims to go live with spot currency trading system in Q3 of this year.

"We’ve got significant endorsement from two of the largest institutional FX trading participants in the market, who are leaders in technology," Adrian Patten, Cobalt's chairman and co-founder and a former foreign exchange trader at UBS and Deutsche Bank, told Reuters.

Both Citadel and XTX will be joining a handful of top banks in committing to be clients of the system when it launches. Blockchain technology curbs the costs of post-trade processing that incurs tens of millions of dollars each year to banks, making it cheaper and quicker.

“We are delighted to be part of the Cobalt initiative to reduce risk and cost in post-trade FX, and we look forward to working with them and other members of the network to transform the landscape,” Zar Amrolia, co-chief executive of XTX, said.

The banks that are committed to Cobalt include Citi, Deutsche Bank and UBS Bank. BNP Paribas, Bank of America Merrill Lynch, Commerzbank and Santander are finalizing the paperwork that will make them clients too.

“Our goal is to be the ledger for the post-trade FX market. What we’re trying to do is to have a one-time reconciliation for FX transactions - a golden record - and post that transaction and cashflow information onto one distributed ledger,” Patten added.