Barclays and Danske Bank joins CLS’s Cross Currency Swaps settlement service

Rick Steves

“Their decision to join our platform is a testament to the risk mitigation and liquidity and operational efficiencies provided by the service, and it underscores our clients’ continued commitment to further mitigate settlement risk.”

Barclays FX

CLS, a prominent market infrastructure group specializing in settlement, processing, and data solutions, has announced the enrollment of three settlement members into its Cross Currency Swaps (CCS) settlement service.

Among them are banking giants Barclays Bank and Danske Bank, who are joining a prestigious roster of financial institutions worldwide in a significant move that underscores the growing importance of risk mitigation and operational efficiency.

Redefining how cross-currency swaps are settled

The CCS service, an extension of CLS’s innovative Payment-versus-Payment (PvP) settlement service, CLSSettlement, offers a transformative solution for settling CCS transactions while reducing settlement risk and optimizing liquidity in the process.

This announcement comes on the heels of a remarkable 38% year-on-year increase in CCS trading volumes submitted to CLSSettlement in the first half of 2023, highlighting the industry’s growing recognition of the service’s benefits.

The CCS service is pivotal in redefining how cross-currency swaps are settled in the financial market. By leveraging CLS’s unique PvP settlement service, settlement members can securely process their CCS transactions, thus mitigating settlement risk.

Additionally, CCS flows are multilaterally netted against all other FX transactions within CLSSettlement. This process significantly reduces daily funding requirements for clients while simultaneously unlocking substantial liquidity optimization benefits across the industry.

“Greater efficiency and transparency in our FX operations”

The decision of Barclays Bank and Danske Bank to join the CCS service underlines their commitment to fortifying risk management and enhancing operational efficiency in foreign exchange (FX) operations.

The move also contributes to the broader agenda of policymakers and regulators who advocate for widespread adoption of PvP as a means to reduce settlement risk across the financial sector.

Lisa Danino-Lewis, Chief Growth Officer at CLS, said: “Their decision to join our platform is a testament to the risk mitigation and liquidity and operational efficiencies provided by the service, and it underscores our clients’ continued commitment to further mitigate settlement risk.”

Jeppe Østerby Thomsen, Global Head of STIR Trading at Danske Bank, commented: “As a leading bank in the Scandinavian region, it is important for Danske Bank to have access to post-trade solutions that deliver risk mitigation and greater cost efficiencies. We are confident that CLS’s CCS service will help us achieve greater efficiency and transparency in our FX operations.”

The enrollment of Barclays Bank and Danske Bank into CLS’s CCS settlement service marks another milestone in the transformation of the financial industry’s settlement landscape. With its commitment to risk mitigation, liquidity optimization, and operational efficiency, CLS continues to play a pivotal role in shaping the future of cross currency swaps and reinforcing the industry’s resilience against settlement risk.

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