AFTAs 2020: Best Trading Infrastructure Provider—CLS Group

The quality of a vendor’s trading infrastructure can be measured by the robustness of the technology it brings to the table, by the range of clients it serves, and by its frequency of updates. This year, CLS Group has successfully ticked those boxes with its foreign-exchange (FX) settlement system, CLSSettlement, breaking a two-year streak held by IPC Systems.

The breadth of CLS’s industry reach has been built on a solid industry reputation within the FX community for timely delivery and system performance. Earlier this year as markets faced market volatility following the emergence of the Covid-19 pandemic, CLS reported having settled an average daily value of payments through CLSSettlement totaling approximately $7 trillion, which was about 20% higher than normal.  

The firm’s offering seeks to address wider industry concerns around settlement risk. In July of this year, CLS conducted analysis of data published by the Bank for International Settlements, which found the proportion of FX trades with payment-versus-payment (PvP) protection has fallen from 50% in 2013 to 40% in 2019. The firm says it is working closely with regulators and market participants to raise awareness of the rise of FX settlement risk and to consider options that solve the problem. CLS has presented on this topic at the Global Foreign Exchange Committee and several regional FX committees. 

Founded in 2002, CLS settles payment instructions for over 70 settlement members and over 25,000 third-party participants and provides significant liquidity efficiencies.

The vendor has also been developing ancillary services to enhance settlement risk mitigation in the FX market through CLSClearedFX, its PvP settlement service for over-the-counter (OTC) cleared FX derivatives, and CLSNow, its same-day gross PvP settlement service for same-day trades that are settled bilaterally.