Today CLS announced that Actinver, BNP Paribas, Citibank and JP Morgan have joined its foreign exchange payment netting system CLSNet, which leverages distributed ledger technology (DLT). There are now nine institutions using the platform. It’s been more than a year since CLS announced the launch of the service with its first customers, Goldman Sachs and Morgan Stanley.
CLS runs another service, CLS Settlement, which processes more than $5 trillion in foreign exchange payments daily and is considered to be systemically important by U.S. regulators. But that platform only deals with 18 major currencies. The role of CLSNet was to expand CLS services to 120 currencies.
“CLSNet brings high-quality industry standardization to previously fragmented and inefficient bilateral netting models,” said Mike Lawrence, Global CAO Rates & Currencies, Citibank. “It will enable broader access to settlement netting as a risk mitigant at an industry level, whilst delivering significant operational efficiencies as the network builds.”
Rather than having to keep cash available for every payment, if incoming receipts can be netted off, the amount of liquidity required is reduced. Additionally, the solution enables efficiencies and reduces risks, especially for emerging market currencies.
“The service continues to gain flow and participants and is operating efficiently. We will continue to invest in the growth and resilience of the service and have a roadmap of enhancements that will further expand the value proposition to clients,” said Alan Marquard, Chief Business Development Officer, CLS.
The solution was developed in conjunction with IBM and is based on the Hyperledger Fabric blockchain.
The full roster of current clients is Actinver, Bank of America, Bank of China (Hong Kong), BNP Paribas, Citibank, Goldman Sachs, Intesa Sanpaolo, J.P. Morgan and Morgan Stanley.
Last week Citi announced it was planning to go live in the Cobalt FX DLT post-trade platform. Cobalt FX has clients such as Deutsche Bank and Saxo Bank, integrates with MarkitSERV and also boasts IHS Markit, Citibank and the Singapore Exchange as investors.
It’s been a busy period for Citi on the blockchain front because it was also part of last week’s launch of the Axoni equity swap platform.
The Hyperledger Global Forum takes place in Phoenix USA on March 3-6. Register by February 18th to get the discounted rates and use this code: HGFLEDGER20