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Former CEO of systemically important CLS joins R3 as adviser

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David Puth who was CEO of CLS until November 2018 has joined enterprise blockchain company R3 as a strategic adviser. During his tenure, CLS was involved in multiple blockchain projects.

CLS provides a centralized clearinghouse for foreign exchange with average daily volumes of $1.86 trillion in March 2019. In 2012 the Financial Stability Oversight Council designated CLS as systemically important to the U.S financial system. When trading currencies, there’s a risk that the counterparty to a trade might become insolvent before handing over its end of the deal. CLS buffers that risk by acting as an intermediary for settlement.

Alleviating this counterparty risk is one of the potential benefits of blockchain by enabling instant settlement without the need for an intermediary such as CLS.

During Puth’s leadership, CLS invested $5 million in R3 and was a board observer. But CLS has an even closer relationship with IBM. Its primary solution, CLS settlement, caters for the 18 major currencies. With IBM it developed a blockchain based system CLSNet that supports another 120+ currencies with clients such as Goldman Sachs and Morgan Stanley.

Additionally, CLS is rumored to be a member of the Utility Settlement Coin (USC) project, an institutional stable coin backed by Central bank deposits being developed by Clearmatics, UBS and 16 other major banks. The purpose of USC is to enable instant settlement for derivative, stock and bond trading.

Last year CoinDesk reported that R3 was interested in getting involved in the project. Their overtures ruffled some feathers, but members of the Clearmatics and R3 teams were seen chatting at the recent Deconomy conference.

Hence David Puth has the ability to build bridges and quite a bit of experience with blockchain activities. The New York executive spent six years at CLS. The bulk of his career was a 19-year stint at JP Morgan Chase, latterly as head of currencies, commodities and emerging markets. Before joining CLS, he headed up global markets for State Street for three years.

Swiss stock market SIX recently announced it was using R3’s Corda for its SIX Digital Exchange (SDX). Citing the SIX project and the HQLax collateral management initiative, Puth commented in a blog post: “Having worked extensively with the regulatory community and with market infrastructures, I am naturally drawn to the work being undertaken by R3.”

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