Provider of risk mitigation and settlement services for foreign exchange (FX) dealers and institutions, CLS, has announced the launch of a new service this Wednesday – CLSNow, a bilateral, same-day FX gross payment-versus-payment (PvP) settlement service.
The new service allows banks to exchange currency positions with less settlement risk, due to the fact that settlement is occurring on a near-real-time basis. According to the statement, JPMorgan and Goldman Sachs were the first banks to go live on CLSNow.
Initially, the currencies offered through CLSNow are the Canadian dollar (CAD), Euro (EUR), British pound (GBP), and US dollar (USD). Further currencies will be added in the future, the statement said.
CLSNow to reduce settlement risk and improve liquidity
In the statement released today, CLS claims that its new service mitigates forex settlement risk, improves liquidity management, and also provides balance sheet benefits for banks.
Commenting on the service, Alan Marquard, Chief Strategy and Development Officer, CLS, said: “With traditional sources of intraday liquidity contracting, there is a growing need for a safe, intraday currency settlement service.”
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“The launch of CLSNow meets this need, further enhances settlement risk mitigation and is another example of how CLS is working to solve challenges for the FX industry.”
At present, the average daily gross value settled in the same-day forex markets is around $300 billion. This is outside of CLSSettlement and across all currencies that settle in CLS.
Currently, the average daily gross value that is settled in the same-day FX market, outside of CLSSettlement and across all currencies that settle in CLS, is approximately USD300 billion. On the FX market as a whole, more than $5 trillion is traded on average per day.
“Removing risk and improving availability of intraday liquidity are central to providing a best-in-class offering to our clients,” added Scott Lucas, Head of Intraday Liquidity, J.P. Morgan.
“The go-live of CLSNow is a significant step for the industry and can positively evolve the same day market by delivering these risk and liquidity benefits. We are delighted to have helped develop, and be a first adopter of, the new service.”