The survey of 15 banks showed that, for 2004 - the first full year of CLS - an average of just under 50% of Interbank trades were settled through CLS, although this ranged from 15% to 65% for individual firms.

Z/Yen says one of the main benefits of CLS has been the ability to achieve volume scalability without the need for additional processing staff. Use of CLS, coupled with additional IT investments has meant that many banks were able to increase FX volumes significantly between 2003-2004 with the same or lower headcount.

According to the research, average annual interbank FX trade volume increased from 1.2 million to 1.5 million, while average headcount dropped from 47 to 45. Z/Yen says the implied increase in efficiency due to CLS was 32%.

In addition to increased scalability, the processing cost per trade for interbank FX has also reduced significantly since 2003. In 2004, the average internal cost of processing a CLS interbank trade is $1.30 compared to $3.70 for a non-CLS interbank trade and $5.80 for a corporate trade.

Jeremy Smith, director of financial services at Z/Yen, says although CLS has reduced internal processing costs for interbank FX trades, the industry now needs to address the issue of reducing costs for corporate trades, particularly the confirmation process. Each corporate trade costs more than four times as much to process ($5.80) as a interbank-CLS trade ($1.30) and one major factor is the confirmation process which costs roughly $2.0 per corporate trade.

Smith told Finextra: "This high cost is caused by the additional manual work rising from sending and chasing paper and faxed confirmations.

"The key challenge for the industry and CLS is to widen take-up of CLS third-party services by the buy-side."