Climate Impact X (CIX), an exchange for trading carbon credits and renewable energy certificates, selected Yaala Labs, the financial technology provider, to consolidate all its trading venues into a single, integrated cloud-based platform.

CIX came out of Singapore’s Emerging Stronger Taskforce, a public-private initiative to establish the country as a climate services and carbon trading hub, with investors including DBS Bank, GenZero (a decarbonisation-focused investment platform founded by Temasek), SGX Group and Standard Chartered. Japan’s Mizuho Financial Group joined as an investor in 2024.

Lalin Dias, chief executive of Yaala Labs, told Markets Media that CIX’s carbon market consisted of four separate trading services – CIX Exchange, an electronic order book for individual projects and standardised contracts; CIX Marketplace an e-commerce like experience to find and buy credits of individual projects, CIX Clear which supports pre-negotiated trades and CIX Auctions, a primary market for newly issued carbon credits.

CIX Exchange used a matching engine from another technology provider and the other three services used  three separate systems that had been built in-house. Dias said that when CIX’s contract with the matching engine vendor came up for renewal, it was an opportunity to evaluate newer technology.

“Once CIX had a look at our P8 platform, they realised that they could retire their four systems and operate all trading services off a single platform,” Dias added. “This would provide their users with a unified experience while materially reducing operational cost and complexity.”

Mark Glossoti, chief operating officer of Climate Impact X, said in a statement that partnering withYaala Labs team enabled CIX to consolidate all its trading venues while preserving the unique features of each market. Glossoti added: “Time to market was critical, and Yaala Labs successfully delivered the solution, demonstrating both the versatility of their technology and their ability to launch new markets at speed.”

It took Yaala Labs approximately four months to implement CIX’s four trading services on the firm’s P8 platform, and they went live in August this year according to Dias. He argued that the flexibility of Yaala Labs’ technology allowed CIX to make changes to their market model to better accommodate the idiosyncrasies of the voluntary carbon market.

Dias said one key improvement was to move from a pre-funded model (where participants had to first onboard their credits) to a T+n delivery versus payment settlement model, which significantly reduces friction to trade on the platform. Other key features were giving users the ability to negotiate terms with counterparties on-screen and an improved delivery experience for those trading standardised contracts.

He continued that Yaala Labs is seeing some demand to provide market infrastructure for environmental products, but he “wouldn’t say it’s a lot” as buyers are struggling to identify and value high quality projects.

“There hasn’t been an explosion in trading volume for these products as some had hoped” added Dias. “Some of the basic building blocks, such as ratings and market data that we take for granted in the securities world, aren’t fully developed yet for environmental products.”

Moving to the cloud

Yaala Labs was founded in 2018 by a team that had been building and operating critical trading technology for nearly two decades at MillenniumIT, the technology arm of the London Stock Exchange Group. MillenniumIT implemented systems for more than 30 exchanges, banks, clearing houses, custodians and regulators.

Dias argued that Yaala Labs’s more contemporary technology allows it to compete with exchanges who have a technology business, and other providers. The firm said in a blog last year with AWS, Amazon’s cloud business, that it built P8 to enable innovators to launch the next generation of marketplaces in the cloud. By building P8 as a cloud-native infrastructure, Yaala Labs said it enables customers to provision the exact resources needed in a given moment, and dynamically scale up and down to meet the changing needs of their business. P8 consists of multiple modules and components, to meet a diverse set of demands.

“This is in contrast to legacy matching engine technologies that require firms to rent space in a co-location facility and then purchase racks and stack physical servers to run their systems – a process that can take many months,” said the blog. “The current version of the platform can scale from 100 msg/sec to 50,000 msg/sec with modest cost increments and we are adding more horizontal scalability capabilities to the product.”

However, Dias claimed that Yaala Labs’ agility and speed is the real differentiator as it only takes the firm a few months to launch a new market. Customers are able to iterate rapidly based on participant feedback and legacy systems cannot support that pace according to Dias.

“Some of our customers are rolling out new features to production every few weeks,” said Dias. “Our support for both electronic and over the counter-style trading on a single platform, and our ability to support innovative non-standard trading models, are the other key differences.”

Consultancy Crisil Coalition Greenwich said in a report this year, Cloud Adoption by Financial Market Infrastructures (FMIs), that more than a third of all applications and services from banks and FMIs have been moved to the cloud.

David Easthope, senior analyst for Crisil Coalition Greenwich market structure & technology, said in a statement that lowering costs is important but not the foremost consideration for banks and FMIs. He said: “Instead, banks and FMIs recognize the operational and strategic advantages offered by cloud and now feel confident enough in maturing cloud technology to take the plunge.”

Digital assets

Dias added that Yaala Labs is also seeing strong interest in its digital asset capabilities as the  inclusion of crypto assets in institutional portfolios, the success of stablecoins and a more permissive regulatory environment (particularly in the US) have created some strong tailwinds.

“From a money market fund on a public blockchain to a new MTF for real estate assets, we have been doing some interesting work in the digital asset space this year,” he said.

Institutional-grade post trade infrastructure for digital assets is also starting to take shape including clearing, netting and custody services that asset managers need to efficiently transact in this space.

“We’ve been quite involved in the rollout of an institutional netting and settlement service for crypto,” said Dias.

A host of new markets are also being launched through a combination of innovators offering markets for new assets and new market models for more traditional assets that use cloud and blockchain.

Dias said: “We can now launch a new trading venue much faster and at a much lower cost than before”

Generative AI is also making a positive impact, according to Dias. The code generation capabilities of leading large language models have improved significantly this year and are starting to transform how the firm builds software and reduces time to market.

“Market infrastructure platforms are complicated beasts with a lot of distributed components producing a lot of notifications and alerts,” added Dias. “We may soon have the capability for such systems to be monitored by AI agents that anticipate potential failure scenarios and alert operators in time for them to take remedial action.”

In October this year, Yaala Labs announced Agent Kernel, an open-source, framework-agnostic runtime designed to streamline the entire lifecycle of AI agent development.