The CLS Aggregation Service (CLSAS), a joint-venture post-trade netting system for over-the-counter foreign exchange trades developed by FX settlement provider CLS Group and a unit of interdealer broker ICAP, has gone live.
According to CLS and Traiana, a division of ICAP that provides solutions for automating post-trade processing of financial transactions, CLSAS will reduce operational risk, lower post-trade costs, and rationalise and consolidate legacy post-trade processes throughout the global FX markets.
Thanks to the service, only aggregated trades will need to be processed and settled by CLS, which the companies say will eliminate settlement risk while reducing the processing burdens on participating banks by more than 90%.
The venture’s eight founding banks – Bank of America, Credit Suisse, Citigroup, Deutsche Bank, Goldman Sachs, J.P. Morgan, Morgan Stanley and Royal Bank of Scotland – have already committed to using it.
The service operates within the CLS regulatory framework, and the technology is provided by Traiana’s Harmony post-trade processing solution.
Trading volumes and numbers of participants in the FX market have grown dramatically, said CLSAS’s developers, and the FX trading community now includes hedge funds, algorithmic traders and retail and institutional participants. The firms argue that the initiative further strengthens to FX market’s global infrastructure.
“The CLS Aggregation service has the potential to unlock dramatically greater capacity across the industry, which will open up new trading opportunities for retail and institutional investors,” said Traiana CEO Gil Mandelzis in a statement. “We are grateful for the strong support from our founding banks and now turn our focus to growing volumes and increasing participation.”