CLS Group (CLS) and Markit today announced the launch of
a new FX settlement service for cross currency swaps.
The firms claim the service will streamline the process
for trade payments by incorporating them into CLS’s existing
payment-versus-payment (PvP) settlement service. CLS receives settlement
instructions from cross currency swaps electronically confirmed using MarkitServ,
an OTC derivatives trade processing service.
Through multilateral netting, the firms say the process
will reduce liquidity and payment demands across the industry.
David Puth, CEO of CLS,
comments,“As part of our ongoing efforts to reduce settlement
risk for our members, we are continuously looking to enhance the portfolio of
FX products that can be launched on our platform. This new service, developed
with Markit and our global community of settlement members, is another example
of the industry working together to introduce innovative ways to reduce
systemic risk in the global FX and OTC derivatives market.”
Brad Levy, managing director
and head of Markit’s processing division, says “Working with
CLS to streamline trade settlement for cross currency swaps demonstrates how
service providers can work together to make swaps market operations more
efficient. This service brings settlement to the diverse community of market
infrastructure providers and OTC derivatives end users connected by the MarkitServ
According to figures from the Bank for International
Settlements, the cross currency swaps market grew by 26% between 2010 and 2013
to USD54 billion per day.