CLS’s new payment netting service based on distributed ledger technology, CLSNet, has gone live with Goldman Sachs and Morgan Stanley.
In a release issued today, CLS says that six additional participants from North America, Europe and Asia have committed to joining the service, although the only one it names is Bank of China (Hong Kong), and that the onboarding of several other market participants is planned in the next few months.
CLSNet has been designed to standardise and increase the levels of payment netting in the FX market for trades not settling in CLSSettlement. By standardising and automating the calculation of payment netting, CLSNet aims to reduce costs for market participants and increase liquidity in FX markets. The service was built in conjunction with IBM and runs on the Linux Foundation’s Hyperledger Fabric blockchain framework.
Commenting on the launch, Alan Marquard, chief strategy and development officer at CLS, says: “We are excited to be launching CLSNet, the first service of its kind to be operated on a DLT platform. Further, this offering demonstrates how we are using our unique, trusted position at the center of the FX market to solve industry challenges. A standardised and automated payment netting process will lead to improved intraday liquidity, reduced cost, improved operational efficiencies and ultimately support business growth.”
Adam Josephart, managing director, fixed income division, at Morgan Stanley, says: “CLSNet will deliver the standardisation and automation needed for non-CLS settled transactions. We are delighted that Morgan Stanley is one of the early adopters of the service.”
Barry Lo, general manager, bank-wide operation department of Bank of China (Hong Kong), comments: “We take great pleasure in participating in CLSNet, which will enhance operational efficiency in trade matching and payment netting for non-CLS settled currencies such as CNH, and strengthen our risk management. This underscores our strong commitment to driving Fintech innovation and represents a major step forward in the application of new technology in our businesses.”
Marie Wieck, general manager, IBM Blockchain, says: “Since we first pioneered the use of blockchain in the FX market nearly three years ago, 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. 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.”