BNP Paribas Extends Partnership with CobaltFX: Enhances Credit Distribution

Tuesday, 02/07/2024 | 07:46 GMT by Arnab Shome

The French bank first adopted Dynamic Credit last year in May.

It seeks to mitigate risks of over-allocation and inefficiencies of credit distribution on dealer-to-dealer venues.

French banking giant, BNP Paribas, has extended its partnership with CobaltFX, part of United Fintech, by expanding the latter’s Dynamic Credit solution to simplify and streamline the allocation of credit for FX transactions between banks and improve access to liquidity, according to an announcement today (Tuesday).

Banks Adopting Dynamic Credit

BNP Paribas first collaborated with CobaltFX, adopting the latter’s Dynamic Credit, a solution designed to optimize the allocation of credit for FX transactions, last year in May. Other than the French bank, London’s NatWest also deployed the solution.

With the latest extension, BNP calculates Dynamic Credit across 12 Electronic Communication Networks, covering over 100 counterparty banks.

“We see this as an important initiative to address regulatory and industry body concerns about the over-allocation and inefficiencies of credit distribution on dealer-to-dealer venues,” said Joe Nash, Head of Global Macro Digital at BNP Paribas. “Moreover, this approach, combined with CobaltFX Analytics, allows us to right-size our limit for each counterparty whilst improving market access with them.”

A Strategic Expansion of Partnership

The press release shared with Finance Magnates further highlighted that this strategic expansion underscores BNP Paribas's commitment to innovation and efficiency in credit allocation, enhancing market access for financial institutions worldwide.

United Fintech acquired CobaltFX (then Cobalt) entirely at the end of 2022 from the previous owners, which included Citibank, Standard Chartered Bank, S&P Global, and Singapore Exchange. It was the fifth acquisition of Christian Frahm's venture, which aims to acquire and accelerate fintech startups. Under the new ownership, the company was rebranded and relaunched with its focus entirely on FX.

Addressing the concerns over the over-allocation and inefficiencies of credit distribution on dealer-to-dealer venues, CobaltFX’s CEO, Darren Coote, said, "This systemic problem has been long overlooked, but there are a group of leaders in the industry that understand the benefits of this unique approach. We are very grateful for BNP's leadership in this regard.”