CLS launches new FX settlement and trade monitoring and reporting tools

CLS launches same-day FX settlement service, J.P. Morgan and Goldman Sachs to try it first

CLS Group, which provides risk mitigation and operational services for the global foreign exchange market, today announced its intent to launch a broader portfolio of products and services focusing on three business lines – settlement, processing, and data.

These new products form part of a strategic shift for CLS, and build on its unique position at the center of the world’s largest and most liquid financial market. Since launching in 2002, CLS has transformed the FX market with its approach to settlement and multilateral netting – enabling thousands of institutions to trade currencies safely and securely, creating operational efficiencies and providing significant cost savings.

As part of its strategic direction, CLS is developing the following new products and services:

Same-day settlement with CLSNow: In the increasingly globalized financial markets, treasury departments within banks often have to source large amounts of currency on short notice. With traditional sources of intraday liquidity, such as the contraction of the repo market, there is a growing need for a safe, intraday currency settlement service.

CLSNow meets this need with bilateral same-day payment-versus-payment gross settlement initially in CAD, CHF, EUR, GBP and USD. The service enables counterparties to optimize the use of available liquidity in the same-day market while mitigating settlement risk.

The service is expected to launch in the second half of 2018, subject to the receipt of any necessary approvals.

Enhancement to CLSNet – with new post-trade monitoring and reporting tool CLSTradeMonitor: Improving post-trade efficiency in an evolving and fragmented FX market has become a significant priority for all market participants. There is a heightened focus on transparency throughout the trade lifecycle due to regulatory reform. The lack of established standardized post-trade consolidated reporting tools can increase operational risk and limit visibility.

CLSTradeMonitor is a post-trade monitoring and reporting tool that provides a real-time consolidated view of the match and confirmation status for all trade instructions submitted to CLSSettlement and CLSNet – a bilateral payment netting solution intended to support trades not settling in CLSSettlement built on a distributed ledger technology (DLT) platform. Trade status details are available across all CLSSettlement providers and counterparties. The combined solution set enables participating institutions to drive process efficiencies such as optimizing intraday liquidity, enabling real-time awareness of currency and counterparty exposures, and reducing operational and credit risk. Both services will be available in the first half of 2018, subject to the receipt of any necessary approvals.

Informed insights with CLS Data: The ability to recognize and react to market changes is critical to an institution’s success and helps to meet best execution requirements. This relies on robust transaction data to gain insight into market trends. Since launching in 2002, we have captured the details of every trade by instrument (swap, spot, outright forward) for the currencies settled in CLS. Our data provides an unparalleled view of FX market activity and has a broad range of uses for market participants.

Subscribers to the CLS data reports can leverage robust FX spot volume, pricing, and order flow reports delivered on an intraday, daily, and/or end-of-day basis depending on requirements. The reports available include:

  • CLS intraday FX spot volume report provides hourly executed FX spot trade volume data in 33 currency pairs to enhance trading models, support post-trade analysis and reporting, and strengthen investment and research intelligence
  • CLS FX order flow data daily report provides aggregated FX spot order flow data showing directional volume by counterparty type, market maker vs non-market maker, and/or net directional volume for all parties
  • CLS FX pricing daily report provides aggregated spot prices with enhanced VWAP (Volume Weighted Average Price) and TWAP (Time Weighted Average Price) values to support best execution analysis.
David Puth CLS

David Puth, CLS

David Puth, CEO of CLS said:

Today marks the beginning of the next phase of CLS’s evolution. Since we launched in 2002, CLS is proud to have successfully supported the market by settling trillions of foreign exchange trades on behalf of thousands of institutions.

However, we cannot stand still; regulatory reform, new technology and structural change mean market dynamics and client requirements are continuously changing. Given CLS’s role at the center of the FX market, its global connectivity to banks and other non-bank institutions, as well as close working relationships with central banks and regulators, we believe we have a unique opportunity to leverage our experience and market insight to create standardized solutions to address common market challenges.

Alan Marquard, Chief Strategy and Development Officer at CLS, said:

CLS is committed to using its trusted position in the FX market to deliver greater efficiencies and reduce risk. These new products will make settlement, processing and data analysis faster, easier, safer and more cost-effective.

By harnessing cutting-edge, market appropriate technologies, CLS will look to solve a new generation of market challenges. Our new strategic focus puts us firmly on the path to achieving this goal over the next few years.

CLS is owned by a consortium of banks and financial institutions from the US and Canada including Bank of America, BNY Mellon, AIG, BMO, Scotiabank, CIBC, Citi, Goldman Sachs, JP Morgan, Morgan Stanley, Northern Trust, RBC, State Street, TD, and Wells Fargo.

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