American financial institutional CLS wants to offer a range of settlement services to its customers in the foreign exchange industry. The company has been collaborating with tech giant IBM to be able to create a netting solution based on the Hyperledger Fabric Blockchain. This solution has gone live in November. Meanwhile, industry heavyweights like Morgan Stanley and Goldman Sachs have welcomed the product, a move that adds a “trust factor” to the initiative. With this, the industry is expected to adopt major enhancements in the coming years.
In addition to the two financial giants, other prospects from Europe, North America, and Asia have expressed their appreciation to the CLSNet. However, the so-called “table-turners” have yet to join the venture, although they are trying to develop a strategy to move their existing infrastructure to a more dependable one. In a statement, the MD of CLS says that the system is now running at its optimum and that initial netting report has been released to the concerned stakeholders.
Notably, IBM has been teaming up with a number of industry leaders to develop enterprise-level solutions for various sectors based on their requirements and use cases. CLSNet is actually a product of this vision since IBM has launched a food tracing Blockchain (in October) and a finance platform (in June) before. The company has launched three major consortiums in just five months, a promising sign for the Blockchain industry.
Unknown to many, CLS’s business model revolves around “payment versus payment” concept connected to the escrow service, which deals with billions of dollars.
CLS removes the risk of delays by immediately paying the two stakeholders, therefore helping the two parties involved in the transaction. Its collaboration with IBM aims to introduce automation in the forex market, making it more standardized than ever before. One way of accomplishing this objective is through Blockchain technology.
Presently, very few forex traders use the net trading approach. Entities, who have expressed interest in the project, still need to manage their transactions manually which makes it difficult for them to go mainstream. The Bank of China general manager has stated that IBM’s latest solution will improve risk management and eradicate the need of having to spend millions on risk management manually.
Over 120 fiat currencies are now available on the platform, a number that is expected to increase in the future. During the CLSNet development, buyers and sellers are consulted and taken into consideration to obtain a neutral platform. The network imposes a code of conduct to maintain transparency and order between various traders. One CLS executive says that an increase in transactions will lower transaction fees and boost intraday liquidity.