Today CLS announced that its blockchain foreign exchange netting solution
CLSNet went live with Morgan Stanley and Goldman Sachs as initial clients. Six other clients have committed to the service including Bank of China (Hong Kong). The plan is to gradually onboard new clients. CLSNet was developed in conjunction with IBM.
Since 2002 CLS has played an important role in foreign exchange markets. CLS has an existing FX netting and settlement system called CLS Settlement that processes $5 trillion in foreign exchange payments daily. It is considered systemically important by US regulators. However, that system only deals with 18 major currencies. For example, it does not include the Chinese renminbi.
The new CLSNet system deals with most of the other currencies, 120+ in total. Given the increasing importance of emerging markets, that’s a big win. It’s also quite open, so hedge funds, brokers and even corporations can use it. The system supports most types of forex transactions, not just spot or next day. Thus it includes forwards, NDFs and swaps.
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