24 Exchange Taps Cobalt FX for FX Swaps Trading
Posted by Colin Lambert. Last updated: April 11, 2025
24 Exchange has officially gone live with FX swaps trading leveraging CobaltFX’ Dynamic Credit solution to optimise credit intermediation and reduce operational risk.
Cobalt’s Dynamic Credit enables traders to maximise credit lines, across channels, in real-time, allowing more flexibility around the deployment of credit and reducing the need for allocated credit lines. Users pre-set credit relationships and dynamically allocate available credit based on real-time trading conditions. This ensures that market participants can execute trades with optimised capital efficiency, avoiding unnecessary pre-funding constraints and reducing settlement risks, the firm says.
The firms observe that smarter and dynamic allocation of credit lines means traders are able to access a deeper pool of liquidity, rather than rely upon one or two channels.
“We are thrilled to be live with FX swaps trading in collaboration with CobaltFX to offer our users a more efficient, cost-effective trading environment,” says Jason Woerz, president of 24 Exchange. “This integration with CobaltFX enables us to redefine how credit is managed in the FX market, giving participants on our global platform unprecedented access to liquidity.”
Darren Coote, CEO of CobaltFX, adds, “24 Exchange’s adoption of our Dynamic Credit process is a testament to its ability to revolutionise credit management in FX markets. By optimising credit usage in real-time, we are helping the industry reduce risk while increasing efficiency and transparency.”
The Full FX View
It is clearly early days for 24 Exchange’s FX swaps business, meaning the true impact of its use of Cobalt’s Dynamic Credit solution will not be seen for some time, but this could be the first hard signal that the credit bottleneck so often spoken about in FX swaps is starting to ease.
Dynamic credit as a concept is something that has, surprisingly to some (me included), taken longer to be embraced than expected, given how it can free up precious credit lines, but the 24X deal could be the first of several. We have witnessed before in markets how it takes just one player to make a move to unleash a torrent of activity – this could be upon us now in FX swaps.
Aside from the market efficiency arguments, there is also the competitive business angle – while the incumbents in FX swaps have a very good business in place, 24 Exchange has shown before that it can make inroads, as it has in NDFs where it has the highest self-reported ADV of those venues that publish data.
While it is understandable that businesses want to protect their franchise, the march of modernisation and technology is inexorable, and a good idea, such as dynamic credit, will be taken up by the industry. Those businesses with carve out credit models have previously been reluctant to embrace the concept because it was seen as opening the door to much greater competition, but the fact is better use of valuable credit lines will benefit them as well.
FX swaps traders, more than any other group in the industry probably, like trading larger tickets and are drawn to liquidity – hence why the voice brokers are still such an important part of the business. By exploiting smarter credit distribution, those platforms already handling over 100 yards of volume could see that explode higher – why would the swaps market be any different to spot where liquidity begets liquidity?
For those platforms looking to build a swaps business, this is also an opportunity – if they are willing to take it. The two markets are very different in nature, but there are market structure similarities between spot and FX swaps, not least the idea that an order from an unusual source can pop up anywhere. Some of those platforms looking at swaps will have if not unique, then lower-key, participants like that on their books, dynamic credit allows not only that order to be distributed more widely, benefiting the maker, but it would also help the platform attract other players.
All of this could make this seemingly routine rollout a big deal, for the opportunity set remains tremendous. Something like 95% of the $4 trillion traded every day in FX swaps is between financial institutions – the type of players who are connected to platforms and looking to trade electronically. Currently, a probably-optimistic guess says that something like 30% of this volume is e-traded and that around 60% of FX swaps volumes is between dealers.
The credit bottleneck has long been blamed for the lack of automation in FX swaps markets, but a solution to help solve it (post-trade optimisation and novation also has to play a role) has existed for some time. Finally, we may be seeing it meaningfully deployed, and, more importantly perhaps, better understood by the industry, leading to greater take up. It is, after all, a $2-3 trillion opportunity.
