Goldman Sachs and Morgan Stanley go live with IBM-powered CLSNet

Goldman Sachs and Morgan Stanley go live with IBM-powered CLSNet

CLS Group, the market infrastructure provider of risk mitigation services to the global FX market, has just announced that CLSNet is now live with investment bank Goldman Sachs (NYSE:GS) and US based investment banking giant Morgan Stanley (NYSE:MS). Six additional members from North America, Europe and Asia, including Bank of China (Hong Kong) will join the service, more to come in the next few months.

As CLS Group explained, CLSNet is a standardized, automated bilateral payment netting service for over 120 currencies operating on a distributed ledger technology (DLT) platform.

Earlier this year CLS informed of the distributed ledger technology (DLT) platform partnership with technology giant IBM (NYSE: IBM).

CLSNet’s aim is to increase the levels of payment netting in the FX market for trades not settling in CLSSettlement. This way the service will reduce costs for market participants, as well as increase liquidity in FX markets. The service also supports compliance with certain principles of the FX Global Code of Conduct.

Alan Marquard

Alan Marquard

Alan Marquard, Chief Strategy and Development Officer, CLS, commented:

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 standardized 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. CLS’s collaboration with IBM has produced valuable insights into the benefits that DLT can bring to post-trade processes. CLS will use the knowledge and experience gained from building this service on DLT architecture as it looks to create greater efficiencies and reduce costs for clients.

Adam Josephart, Managing Director, Fixed Income Division, Morgan Stanley, added:

CLSNet will deliver the standardization 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), explained:

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

Marie Wieck

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,” concluded 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.

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