Noble Bank International — The Next-Generation Bank Designed For FX & OTC Post-Trade Services
Noble Bank International (“NBI” or “Noble”), the first non-fractional reserve bank, is officially announcing the launch of our initial service, Noble FX. With this launch, Noble introduces an industry-changing approach to real-time post-trade banking for OTC markets. Our bank allows clients to create their own pools of credit, enabling counterparties to clear, net and settle spot FX and precious metals transactions in real-time. Our fully customizable and configurable rules that guide each pool represent a truly revolutionary step towards greater flexibility and functionality in post-trade.
Over the past few years, decreased access to credit, clearing and counterparties has constrained FX and OTC markets and trading. Increased fragmentation, expensive post-trade mechanisms and burdensome regulatory capital requirement have forced traditional providers to reduce their client lists, reduce credit to existing clients, or entirely exit the market.
The three themes we champion at Noble are:
- Simplify the post-trade workflows for FX and OTC transactions
- Connect institutional participants in a Peer-to-Peer manner
- Reduce risk and cost by creating transparency and enabling real-time clearing, netting and settlement
Lowering the Barrier
Our mission at Noble is simple: provide a banking utility that enables any client to clear, net and settle FX and OTC transactions in real-time. Gone are the days of…
- A lengthy and often complicated process to set up credit relationships
- Fragmented and restricted credit between participants
- Expensive cost and capital barriers for participants
“Our goal is to help the FX and OTC markets with increased credit access and decrease post-trade costs, rather than replace any traditional providers of these services including prime brokers or exchanges,” said John Betts, CEO at Noble. “We strongly believe there is a great opportunity to help those providers service more clients at better margins by partnering with them.”
With the Noble FX service, clients can be live in as little as one week. Joining a credit pool is as simple as signing on to the established rule book. Creating a pool is just as easy. After configuring a rule book, clients invite participants to join while Noble seamlessly enables all the post-trade workflows. With fees below $5 per $1mm transacted and no minimum ticket sizes or fees, the savings are substantial.
“Noble’s FX service not only provides a fair and open-access post-trade solution, but will likely be a catalyst for positive change in the FX market,” said Alan Bozian, former President and CEO at CLS and Board Member at Noble. “This is a step forward in the industry for positive change and lower risk.”
Integrating the Banking Layer
The foundation for the Noble FX service is our wholly-owned bank, Noble Bank International, chartered and regulated under US law. By owning the bank, we have vertically integrated a number of functions that typically require costly integration. The state-chartered bank, based in the US Territory of Puerto Rico, is regulated under US federal law. NBI is a non-fractional reserve bank. This means that NBI does not lend or re-hypothecate client assets; rather, assets are legally segregated in the name of the client and bankruptcy-remote, held at NBI’s global custodian, BNY Mellon.
Simply put, client assets have no credit exposure to NBI:
- We don’t put client assets at risk
- We enable clients to use their assets as collateral to support transactions
- Our entire platform is run with real-time reconciliation
With all entry and exit accounts pre-approved and no third-party payments allowed, security and compliance are at the heart of NBI.
NBI Settlement Insurance
We have taken a fresh look at the limitations and scalability of how settlement protection is typically provided in the industry. Instead of relying on a closed group of members who provide their balance sheets, we have remodeled settlement protection to be covered by the cash collateral of participants, and created a model of secondary insurance as an investable asset class that delivers daily liquidity with high-yield returns. We will be expanding upon this investment opportunity in later posts.
“The Noble team brings deep expertise and many years of experience in market structure,” said Peter Sands, Senior Fellow, Harvard Kennedy School and member of the advisory board for Noble. “They have a deep understanding of the nuts and bolts of FX settlement and how these processes affect the risks and economics for players in the FX market. This depth of knowledge enables Noble to identify opportunities to streamline processes that are in many respects the same as they were decades ago, and to create innovative solutions that deliver tangible benefits for market participants.”
The Noble FX service simplifies our clients’ post-trade workflows and enables them to grow their business profitably. With the Noble, we empower our clients to clear and settle without the limitations of traditional credit access, and thus we encourage all FX and OTC traders to consider Noble Bank International for their post-trade services.
We thank our clients and supporters for the positive reception so far. We have more announcements coming soon. Please email Noble at firstname.lastname@example.org or visit noblegrp.com.
Noble Media Contact