Commonwealth Bank of Australia has licensed a solution from ACI Worldwide to manage foreign exchange (FX) trading under a continuous linked settlement (CLS) system.
The Australian bank is adding CLS functionality to its Money Transfer System processing platform - also from ACI. MTS is a real-time, high-value payments processing, and liquidity and risk-management system for domestic and international funds transfer.
The CLS initiative is backed by a consortium of 63 of the world's major FX banks with a view to reducing the settlement risk involved in FX trading.
"CLS is a clear example of an industry coming together to tackle the issue of settlement risk on FX trades - that is, the risk one party will pay away currency it sold but not receive currency it bought," says Bruce Munro, head of institutional banking transaction services for Commonwealth Bank. "In order to maximise the benefits of CLS, settlement members like Commonwealth Bank will require an extremely reliable, robust solution that is capable of being integrated with all existing FX and payment infrastructure."
ACI's CLS solution operates on IBM RS/6000 servers under the AIX operating system.