• Fintech company Capitolis expands FX novation platform, targeting institutions like prime brokers, executing banks, hedge funds, and real money managers.
• The platform automates the process of replacing existing contracts with new ones, optimizing investor portfolios.
• The company partnered with British clearing giant LCH earlier this year to enhance risk management across FX forwards, swaps, and cross-currency swaps.
• The result of the collaboration with LCH and nine major banks showed a 42% reduction in funding costs.
Fintech company Capitolis has announced the expansion of its FX novation platform to include key buy-side and sell-side market participants, signaling its intended new focus on institutions like prime brokers, executing banks, hedge funds, and real money managers.
The FX novation platform is designed to optimize investor portfolios by automatically replacing existing contracts with new ones. Gil Mandelzis, the CEO and Founder of Capitolis stated in a press release on Businesswire: “We’ve seen great benefit in bringing most major market participants together on one automated novation platform, and many that weren’t participating in the past are now actively engaged on the platform.”
Earlier this year in June, Capitolis joined hands with LCH, a UK-based clearing giant, to revolutionize risk management in the FX industry. Through this collaboration, the companies created LCH’s FX Smart Clearing solution, which employs Capitolis’ post-trade optimization technology to enhance risk management across FX forwards, swaps, and cross-currency swaps.
Capitolis expressed that this combined effort could improve both cleared and uncleared markets, ensuring suitable capital and funding allocation. A proof-of-concept, resulting from a partnership with nine major banks, demonstrated the potential of FX Smart Clearing. The experiment led to a 42% reduction in total funding costs, indicating the effectiveness of the Standardized Approach to Counterparty Credit Risk (SA-CCR) methodology.
Established in 2017, Capitolis’ mission reaches beyond banks to institutional investors and is backed by prominent venture capital firms such as Andreessen Horowitz and Sequoia Capital. The expansion of the FX novation platform reiterates the company’s commitment to reshaping the FX market landscape.
