A recent news release indicates that a blockchain payment netting service is now live. CLSNet is a joint venture between IBM and CLS, a foreign exchange settlement service. The project comes to bear after long months of development.
CLSNet standardises the payment netting service while automating it at the same time. Essentially, this enables the process to avoid the usual bottlenecks that lead to high costs of settlements.Already, Goldman Sachs and Morgan Stanley are using the solution.
Blockchain payment netting service to reduce costs
Interestingly, CLS expects six more participants to join the platform. Particularly, the participants will come from North America, Europe and Asia. The next few months will witness the onboarding of more market participants. As CLS explained in the release, the new solution will cover over 120 currencies.
In particular, the blockchain payment netting service focuses on buy-side and sell-side institutions. Interestingly, the service will “increase the levels of payment netting in the FX market for trades not settling in CLSSettlement.”
In part, the news release reads:
“By standardizing and automating the calculation of payment netting, CLSNet can reduce costs for market participants and increase liquidity in FX markets. The service also supports compliance with certain principles of the FX Global Code of Conduct.”
Interestingly, this is not the only project from the CLS/IBM blockchain initiative. Late July this year, the companies launched a proof of concept (PoC) for LedgerConnect. Particularly, this is a blockchain solution “designed to enable banks, buy and sell side firms, FinTechs and software vendors to deploy, share and consume services hosted on a shared distributed ledger network.”
With LedgerConnect, firms will be able access services in areas such as know-your-customer (KYC) processes. Further, the solution will facilitate sanctions screening, collateral management, derivatives post-trade processing and reconciliation and market data.
Particularly, the blockchain technology provides a single platform with enterprise-grade network to help organisations to increase their efficiencies.
Already, LedgerConnect has nine members from the financial industry. Barclays and Citi are among the institutions. Interestingly, the solutions put IBM ahead of competition in terms of blockchain-focused initiatives.