FX risk reduction utility CLS has gone live with CLSNet, a bilateral payment netting application running on distributed ledger technology from IBM
Designed to standardise and increase the levels of payment netting in the FX market for trades not settling in CLSSettlement, the new platform is is now live with Goldman Sachs and Morgan Stanley.
Six additional participants from North America, Europe and Asia, including Bank of China (Hong Kong), have committed to joining the service, with a steady onboarding of several other market participants planned in the next few months.
The new platform is intended to reduce the post-trade risk present in settling foreign currency trades in emerging markets.
Alan Marquard, chief strategy and development officer, CLS, outlines further benefits: “A standardised and automated payment netting process will lead to improved intraday liquidity, reduced cost, improved operational efficiencies and ultimately support business growth.”
CLSNet was built in conjunction with IBM and runs on the Linux Foundation’s Hyperledger Fabric blockchain framework.
"IBM has been working hard with CLS on the development and deployment of CLSNet as the first post-trade production deployment of blockchain technology in a global market utility,” says Marie Wieck, general manager, IBM Blockchain. “With CLSNet now in production with two of the world's largest banks, for a major market function, it is a testament to the ongoing maturity of blockchain technology and the value that it can deliver in practice.”
Editorial | what does this mean?