CLS Group Sets Record With $19.1 Trillion FX Payments
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Forex market infrastructure entity CLS Group has reached a significant milestone. Last week, the company processed $19.1 trillion of foreign exchange (forex) payments. This new record broke the old $16.3 trillion recorded in December last year.
Per the press release, CLS’s way of settling payments via a PvP system reduced risks associated with settlement, which is a severe issue in FX transactions. Every day, CLS is believed to clear more than $6.5 trillion, involving 18 of the most traded currencies.
CLS Cleared $19.1 Trillion In FX Trades With Just $72 Billion
CLS’s system guarantees that FX trade payments occur at the same time and seeks to protect members and their customers against the danger of non-settlement
CLS stated that by using its central system and multilateral netting method, the firm has cut funding needs by over 96%. This massive drop shows how CLS makes things safer and more efficient, helping clients use their money and resources better.
CLS handled $19.1 trillion in settlements using only $72 billion. This is just 0.38% of the total amount settled, showing that very little money was needed compared to the huge amount handled. The company says this method cuts costs and makes moving money in the FX market easier.
Above 70 of the world’s foremost financial organizations are members of CLS, plus over 35,000 more users, including multinational corporations, non-bank financial entities, funds, and banks.
Last year, CLS revealed that its daily forex trading volumes in January 2023 picked up after a three-month dip that began in September 2022.
CLS Group Aims To Reduce Systemic Risks In The Forex Market
CLS is working on including the renminbi, clearing houses, and the rouble in its network to address potential systemic threats in the growing market. CLS Bank, managed by 21 central banks, seeks to increase its membership within the next 18 months as International policymakers strive to strengthen markets.
The US has identified the organization as systemically vital because it balances risk in the most liquid market globally. Many forex trades do not flow through a centralized risk management location, like a clearing house or an exchange. Instead, CLS serves as a trade mediator by verifying, netting, and executing each party’s payment instructions daily.
CLS is a professional US financial institution that offers settlement solutions to its members in the forex market. Even though the FX market is distributed and has no clearing facility or a central exchange, companies that use CLS to execute their FX trades can reduce the settlement risk linked to their trades.
