CLS and Markit Offer Cross Currency Swaps FX Settlement

Traders who execute trades in cross currency swaps can now clear a new way.

CLS Group (CLS), a provider of risk mitigation and operational services for the global foreign exchange (FX) market, and Markit, a vendor of financial information services, announced the launch of a new FX settlement service for the cross currency swaps market.

The settlement system offers cross currency swap traders a way to minimize their risk – as these types of trading counterparties are subject to significant settlement risk due to the high value of initial and final principal exchanges. The service provides a streamlined process for the payments related to these trades by incorporating them into CLSs existing unique payment-versus-payment (PvP) settlement service. CLS receives settlement instructions from cross currency swaps electronically confirmed using MarkitSERV, the OTC derivatives trade processing service from Markit.

According to a press release, the new service was developed in consultation with leading financial institutions in the cross currency swaps market, creates greater operational efficiencies and, through multilateral netting, reduces liquidity and payment demands across the industry.