The joint venture between CLS Group and Traiana, an Icap company, to provide trade aggregation services to participants active in the over-the-counter FX market has gone live.
The service, known as CLSAS, aims to reduce operational risk, lower post trade costs and rationalise and consolidate legacy post-trade processes throughout the global FX markets.
Only aggregated trades will need to be processed and settled in CLS, providing settlement risk elimination whilst alleviating the processing burdens on participating banks by 90 per cent or more.
Operating within the CLS regulatory framework, the supporting technology for the system is provided by Traiana Harmony.
The FX market has undergone dramatic growth in terms of volumes traded and the expansion of its community which now includes hedge funds, algorithmic traders, and retail and institutional participants, many of whom are prime brokerage clients of the banks.
The founding eight banks who have already committed to the joint venture are: Bank of America, Credit Suisse, Citigroup, Deutsche Bank, Goldman Sachs, J.P. Morgan, Morgan Stanley and Royal Bank of Scotland.
Rob Close (pictured), chief executive officer of CLSAS and CLS Group and president and chief executive of CLS Bank International, says: “Since the announcement in April, there has been widespread support for the service which is endorsed by the eight founding financial institutions. This marks one of a number of steps from CLS Bank to further provide high quality risk reduction and processing efficiency solutions for the FX community. The joint venture with Traiana leverages essential core competences of both institutions and we look forward to a very successful partnership.”
Gil Mandelzis, Traiana’s chief executive officer, adds: “Today marks a significant landmark in the post-trade landscape. The CLS aggregation service has the potential to unlock dramatically greater capacity across the industry, which will open up new trading opportunities for retail and institutional investors. We are grateful for the strong support from our founding banks and now turn our focus to growing volumes and increasing participation.”