CLS, a market infrastructure delivering settlement, processing and data solutions, and Finastra, one of the world’s largest fintechs, have agreed to enter into a collaboration to provide Finastra customers with access to CLSNet, CLS’s bilateral payment netting calculation service. The move addresses increased demand from the buy-side for a centralized infrastructure to manage post-trade processes. 

The new service further accelerates Finastra’s Marketplace strategy, and brings a compelling value proposition to customers. Through a single integration between CLS and Finastra’s Fusion Confirmation Matching Service (CMS), Finastra customers (including more than 800 corporates / buy-side institutions) will be able to access CLSNet without the need for additional development. Users will be able to view trades which are expected to settle, confirm trade details with each relevant counterparty as well as make net settlement payment calculations on a per currency basis, thereby removing manual reconciliation netting processes. 

A large number of market participants currently manage the bilateral settlement process via email. The collaboration between CLS and Finastra is a significant step in addressing the operational risk associated with these manual processes, in particular between banks and their buy-side clients.  

The impact of limited payment netting is exacerbated by the high settlement costs associated with emerging market currencies, despite their rising relevance for FX market participants. As a bilateral payment netting calculation service for FX trades not settling in CLSSettlement, CLSNet allows FX participants to net payment amounts directly with counterparties before settling through the correspondent banking system. By using standardization and enabling a greater percentage of FX transactions to settle on a net basis, the service optimizes intraday liquidity, while delivering greater operational efficiency and increased risk mitigation for non-CLS-settled currencies. For CLSNet participants, the collaboration with Finastra will create a greater network effect by enabling a wider group of market participants to benefit from the standardization and automation of post-trade netting processes. 

Keith Tippell, Global Head of Product, CLS, said: “In response to market demand, we are evolving CLSNet to support the partnerships and connectivity options necessary to ensure broad-based adoption and, additionally, exploring new functionality related to emerging market currencies. The partnership with Finastra is an important step in this evolution and a good example of two major FX ecosystem service providers collaborating for the benefit of their customers and the FX market as a whole.” 

Neil Macro, Global Head of Sales – Financial Messaging and Services, Finastra, added: “We are delighted to partner with CLS on this initiative. Finastra’s Fusion Confirmation Matching Service brings together the world’s largest buy-side and sell-side FX players. Providing a seamless integration with CLSNet is part of our commitment to deliver complementary marketplace services to our customers.” 

Francisco Oliveira, Global Head of FX, Local Markets & Commodities, BNP Paribas, commented: “As an early adopter of CLSNet, BNP Paribas is supportive of industry initiatives focused on settlement risk mitigation. This collaboration will be beneficial to a wide range of clients and other market participants, accelerating adoption and the network build out of CLSNet.” 

Leigh Meyer, Global Head of FX Operations, Citibank, added: “Given the sharp focus within the FX markets on all risks associated with the settlement process, we see great value in this collaboration which should enable a wide range of market participants to seamlessly adopt and benefit from the standardized processes implemented by CLSNet.”  

Russell LaScala, Co-Head of Global FX, Deutsche Bank, added: “Driving efficiency in the settlement processes remains a key focus for market participants – this partnership will help the industry further in achieving these goals.” 

Anna Chadderton, Global Head of FX Operations, Goldman Sachs added: “Goldman Sachs welcomes this partnership which will drive further efficiency and increase automation and standardization in post-trade execution services. We remain committed to opportunities for risk reduction and liquidity optimization in the FX industry.”