CLS, a market infrastructure group delivering settlement, processing and data solutions, has today announced the launch of CLSClearedFX ─ the first payment-versus-payment (PvP) settlement service specifically designed for over the counter (OTC) cleared FX derivatives.
The service will enable central counterparties (CCPs) and their clearing members to safely and effectively mitigate settlement risk when settling cleared FX products.
The global clearing house LCH is the first to go live with the service offering for their clearing members, with further CCPs expected to join.
While the new service will operate independently of CLS’s PvP FX settlement service (CLSSettlement), participating CCPs will realize equally effective risk mitigation, cost-efficiency and liquidity benefits as those using CLSSettlement.
Alan Marquard, Chief Strategy and Development Officer at CLS, said:
Through the launch of CLSClearedFX, CLS is taking its proven track record in mitigating FX settlement risk to the cleared FX market. Bringing together the market infrastructures that mitigate counterparty and settlement risk, the two biggest risks in OTC cleared FX products, is a powerful step forward for the market.
Paddy Boyle, Global Head of ForexClear at LCH, added:
Offering physical settlement of cleared OTC FX products is a landmark moment for the market. We are delighted to be collaborating with CLS in pioneering in this area, delivering efficiencies and reducing risk for participants in the FX market.