CLSNet service covers approximately 120 currencies and DB is joining its growing community of global and regional financial services institutions, which includes eight of the top 12 global banks. The centralized platform was originally built with IBM using the Hyperledger Fabric enterprise blockchain.
FX settlement specialist CLS Group has onboarded BNY Mellon, the world’s largest custodian bank and ING, the largest Dutch bank, to CLSNet, the foreign exchange bilateral payment netting system for emerging currencies.
Using CLSNet helps FX market participants adhere to the FX Global Code – the industry’s global principles of good practice for the FX market. Instead of settling every transaction individually, automated netting reduces the required margins, leaving more funds available for other purposes. As such, the solution helps increase liquidity, reduce counterparty risk and costs of manually calculating netting or settling a higher volume of transactions. Plus, the cost of settling emerging market currencies tends to be relatively high.
Commenting on the new additions to CLSNet, Lisa Danino-Lewis, Chief Growth Officer, CLS said, “We are delighted that BNY Mellon and ING are joining CLSNet’s growing community of users and will benefit from the risk mitigation, operational efficiencies and liquidity advantages that the service delivers. In addition to banks, CLSNet is directly accessible to most market participants, including funds, corporates and non-bank financial institutions, making its benefits widely available to the FX industry.”
Jason Vitale, Head of Global Markets Trading, BNY Mellon added, “We are continuously identifying the latest solutions that will enhance our clients’ experience across the trade lifecycle. By joining CLSNet, this will enable us to provide clients with improvements in intraday liquidity and execution efficiency.”
Robbert Zee, FM Operations Lead, ING added: “CLSNet provides the functionality to strengthen and standardize the post-trade processes across the global currency spectrum. As the largest Dutch bank with significant global operations, our participation in the service will be integral to our ability to improve operational efficiency and reduce risk for the currencies that are not currently eligible for CLSSettlement.”
CLSNet has seen record growth this year, indicating strong industry support for the service. The platform reported the average daily notional value of net calculations consistently at more than $115 billion over the last 12 months. A notable peak was reached on December 20, 2023, when the service recorded a daily notional high of $445 billion netted, marking a remarkable milestone in its operation.
CLSNet standardizes and automates post-trade matching and netting processes across the global currency spectrum. As market participants continue to focus on the risks associated with post-trade processing and settlement in currencies outside of CLSSettlement, CLSNet offers standardization and automation through a single platform which mitigates risk, reduces operational costs and optimizes liquidity for these currency flows.