Capitolis, the technology company creating safer and more vibrant capital markets, announced it has successfully launched its fast-track Novations technology with the execution of a same day tear-up. Reaching this milestone—the first of its kind in the foreign exchange (FX) options market—will significantly reduce the time and resources required by banks, prime brokers, and hedge funds in the approval process.

Novation tear-ups represent a meaningful amount of novations completed on the Capitolis platform and fast-tracking trades will bring a large benefit to the market. Previously, it took up to 10 days (T+10) to complete a tear-up largely due to the manual process involved to get the novations approved by the various parties. Capitolis believes that through improved technology and processes, up to 70% of all novations can be executed at T+1 or better.

Capitolis has been working with several prime brokers, executing banks, and some of the world’s largest hedge funds on the design of this fast-track technology. It has been thoroughly tested and is now fully launched for all platform participants to leverage.

“Capitolis had already made tremendous progress in reducing risk in the market, allowing for more novations to be completed, increasing efficiency of balance sheets, and reducing gross notional for our participants. We’ve also seen massive volume growth, almost 50%, on the platform in the past year and have added many more FX prime brokers, executing banks, and major buy-side participants,” said Gil Mandelzis, CEO & Founder, Capitolis. “We now look forward to taking our network to the next level by getting as close as possible to near real-time novation processing and completion.”

“As part of our broader industry commitment to lead efficiency in the Financing and Clearing industry, we welcome this new process to significantly reduce the time and resources spent on this important FX Prime Brokerage process,” said Craig Robertson, Managing Director, Liquid Financing, Barclays.

Last year, Capitolis expanded its novation product to include agency flow, enabling automation of agency novation while maintaining anonymity. The company’s Novations platform gained strong momentum to close out 2023: Capitolis onboarded most major buy-side and sell-side market participants.

Source: Capitolis