SIX Group’s Bolsas y Mercados Españoles (BME) has launched a settlement system for foreign exchange transactions in a payment versus payment (FXS) mode.
The implementation has been approved by the Bank of Spain.
Specifically, the new system improves efficiency and reduces risks in FX transactions – an advantage over bilateral settlement, according to the exchange, wherein one counterparty faces the loss of the total transaction amount if the other does not deliver the sold currency.
The offering is also set to reduce the reliance on credit lines, thus increasing both the number and volume of potential counterparties.
José Manuel Ortiz, head of securities services (interim), said: “We are convinced that our neutral position as an operator of financial markets and the robustness of our technical infrastructure will allow us to offer a high-quality and highly available service to participants.
“The implementation of the FXS service represents an important step towards greater efficiency and security in foreign exchange transactions in Europe.”
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FXS also offers potential for integration of the service into the SWIFT network and netting of all transactions between two counterparties.
Once live, the system will be available to financial institutions across the EU and Switzerland.
Going forward, BME confirmed that it is also working on other initiatives aimed at increasing its presence across the FX landscape.