CLS is a financial institution with the aim to provide a variety of settlement services to its clients in the foreign exchange sector. They had been working with IBM to develop a netting solution, based on the Hyperledger Fabric blockchain. Towards the end of last month, this solution went live. Fortunately, the product was welcomed by the industry giants, Morgan Stanley, and Goldman Sachs, which does not only add a ‘trust factor’ to the venture, but the community is also expected to observe a major deal of enhancements being implemented in the next few years.
It is worth noting that apart from these two banking giants, CLSNet is being appreciated by several different prospects based in Europe, North America, and Asia. Some of the “table-turners” have not yet joined, but they are deriving a strategy to move their current infrastructure to a more efficient one. As far as the testing is concerned, the MD of CLS made a statement, confessing that the system is running at its optimum and the initial netting report has also been issued to the concerned stakeholders.
It is quite interesting to notice that IBM has been partnering with several niche leaders in order to create enterprise-level solutions for different industries, depending on their requirements and use cases. CLSNet happens to be an extension of this vision as previously, IBM rolled out a food tracking blockchain and a finance platform, in October and June, respectively. So within 5 months, they have introduced 3 major consortiums and this pace seems quite promising for the blockchain industry as a whole.
Most of you might have heard the name for the very first time. But those who are related to the foreign exchange must already be aware of the ease CLS has created for two parties who enter a trade agreement. Basically, their business model revolves around ‘payment versus payment’ ideology, which is quite relevant to the Escrow service, dealing in billions of dollars.
Therefore, CLS helps both parties mutually by eliminating the risk of delaying factor as the two stakeholders are paid instantaneously. You must be wondering as to why did they partner with IBM and invested a huge amount of resources in an already booming use case. Well, they plan to achieve automation across the forex market and make it more standardized than it currently is. Of course, an amazing way to do it is with the help of blockchain.
As of yet, there is only a handful of forex traders utilizing the net trading approach. Even the ones who are interested in this, need to handle their settlements manually and this is a hurdle in making it go mainstream. The General Manager of the Bank of China also mentioned that the latest solution by IBM will enhance risk management as well and eliminate the need for spending millions on managing the risk manually.
One of the most encouraging factors is that more than 120 fiat currencies are offered over the platform and the number is expected to increase in the near future. It must also be mentioned that while creating CLSNet, both buyer and seller sides were consulted and their opinions were weighed equally to achieve a neutral platform. In order to keep transparency and order between different traders, the network enforces a code of conduct. One of the chiefs at CLS also stated that such a boom of events will reduce the transaction fee and intraday liquidity will also rise.
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