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Goldman Sachs and Morgan Stanley go live with CLSNet

Monday 3 December 2018 10:22 CET | News

Goldman Sachs and Morgan Stanley have gone live with IBM’s and CLS’ CLSNet, a standardised, automated bilateral payment netting service for over 120 currencies, running on blockchain.

As reported in July 2018, market infrastructure group CLS and IBM teamed up for a proof-of-concept (PoC) using a distributed ledger technology (DLT) platform to offer services hosted on a shared network.

In the latest development, six additional participants from North America, Europe and Asia, including Bank of China (Hong Kong), have committed to joining the service. More institutions will sign up in the coming months.

The tech, designed for both buy-side and sell-side, will standardise and increase the levels of payment netting in the FX market for trades not settling in CLSSettlement, which can reduce and increase liquidity in FX markets.

CLS says that a lack of standardisation and automation introduces risk and operational inefficiencies for market participants, as processes often have manual intervention and are not fully scalable.

Further, there are many FX market participants that do not net the payments in respect of FX trades, instead choosing to settle on a gross basis, which results in higher intraday liquidity demands and causing institutions to hold more capital.

CLSNet runs on the Linux Foundation’s Hyperledger Fabric blockchain framework.


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Keywords: Goldman Sachs, Morgan Stanley, CLSNet, blockchain, payment netting, FX , IBM, trade, standardisation, automation
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Countries: World