CLS has been steadily expanding and refining its services to meet the diverse needs of the foreign exchange industry, with a strong emphasis on reducing settlement risks and boosting operational efficiency.
The growth of the CLSSettlement service has been significant, with most of the top-tier investment managers now using CLSSettlement. The service currently settles on average $7 trillion daily across 18 of the most actively traded currencies globally, accounting for a large proportion of FX trades in the market. In 2023, the number of third-party participants rose further from an already large base by over 6%, including banks, funds, non-bank financials, and corporates.
In the past year, the adoption of CLSNet … has seen a 40% year-on-year increase in average daily netted values
As the FX industry transitions toward T+1 settlement cycles (settlement in one day after execution), CLS has positioned itself at the forefront with two key services designed to assist investment managers. First, CLSTradeMonitor provides near real-time oversight of all settlement payment instructions. This tool helps investment managers quickly identify and resolve any exceptions, ensuring timely settlements. It offers a consolidated view of all trade instructions submitted to both CLSSettlement and the firm’s payment netting service CLSNet, regardless of the type of provider.
Second, the firm’s CLSNet platform offers an automated bilateral netting calculation service covering 120 currencies, providing significant value, particularly for same-day instructions that cannot be settled within CLS due to custodian cut-off times. By calculating net payment obligations, CLSNet reduces funding requirements and the number of payments, resulting in operational efficiencies through full automation.
The service has gained substantial traction, with volumes and users steadily increasing. Over the past year, the average daily netted value has exceeded $120 billion, with a record day in June 2024 of $593 billion. Further, in the last year CLSNet has seen exponential growth, with eight of the top 10 global banks joining CLS’s FX netting calculation service, including BNY Mellon, ING and Deutsche Bank. CLS continues to enhance the platform in order to reduce risk and improve liquidity for a growing network of FX participants, including the buy-side.
CLSSettlement settles an average daily value of over $7 trillion and set a record high of $19.1 trillion on 20 June 2024
CLS has also continued to advance its multi-year technology investment initiative, Convergence. This programme has delivered a cutting-edge, scalable and resilient post-trade technology platform across global financial market infrastructures. A critical milestone in this journey was migrating CLSSettlement onto a unified service platform, which optimizes the technology underpinning its settlement services and enabling greater flexibility to further evolve the PvP offering.
“CLSSettlement settles an average daily value of over $7 trillion and set a record high of $19.1 trillion on 20 June 2024,” says CEO, Marc Bayle de Jessé.
“The funding required to settle this amount was just $72 billion, demonstrating the substantial capital and liquidity savings we provide for our clients and the broader FX ecosystem.”
CLS’s chief growth officer, Lisa Danino-Lewis, says: "In the past year, the adoption of CLSNet, our bilateral payment netting calculation service, has seen a 40% year-on-year increase in average daily netted values.”
“This reflects the market’s growing demand for risk mitigation and operational efficiencies, particularly for emerging market currencies where PvP settlement may not be available."