US investment banks JP Morgan and Goldman Sachs are the first firms to go live on a same-day FX settlement service launched by CLS.
Known as CLSNow, the bilateral FX gross payment-versus-payment settlement service allows banks to exchange currency positions with mitigated settlement risk on an almost real-time basis.
CLS said that the service was developed as banks seek efficient ways to manage liquidity in light of the tightening, or neutral, stance of central bank monetary policy, and post-financial crisis reforms. Currencies offered on CLSNow include Euro, UK pound sterling, US dollar and Canadian dollar, with plans to add more over time.
“Removing risk and improving availability of intraday liquidity are central to providing a best-in-class offering to our clients,” said Scott Lucas, head of intraday liquidity at JP 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.”
The FX settlement provider said earlier this year that its growth in new business was driven primarily by buy-side institutions. CLS saw a 2.5% increase in new business for its CLSSettlement platform, and $130 billion in average daily settlement volume with 90% of the growth coming from asset managers.
More recently, CLS named long-serving European Central Bank market infrastructure lead, Marc Bayle de Jesse, as its new chief executive. Bayle de Jesse replaced David Puth who stepped down from the role in September 2018 after six years.
“With traditional sources of intraday liquidity contracting, there is a growing need for a safe, intraday currency settlement service. 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,” Alan Marquard, chief strategy and development officer at CLS.