Markit and CLS to provide cross currency swaps settlement
Financial information provider Markit and foreign exchange settlement service CLS have launched a new service for the cross currency swaps market.
The service provides a streamlined process for the payments related to these trades by incorporating them into CLS’s existing payment-versus-payment settlement service. CLS receives settlement instructions from cross currency swaps electronically confirmed using MarkitSERV, the OTC derivatives trade processing service from Markit.
The new service, developed in consultation with financial institutions in the cross currency swaps market, creates greater operational efficiencies and, through multilateral netting, reduces liquidity and payment demands across the industry.
Charles J Bristow, co head of global rates trading and head of funding for macro markets at JP Morgan, said: “Settlement remains a critical risk for the market to manage, particularly across products where the exposure to FX settlement can be significant. This new service developed by CLS and Markit to settle cross currency swaps is an important step which will help to mitigate settlement based risks.”
Brad Levy, managing director and head of Markit’s processing division, said: “Working with CLS to streamline trade settlement for cross currency swaps demonstrates how service providers can work together to make swaps market operations more efficient. This service brings settlement to the diverse community of market infrastructure providers and OTC derivatives end users connected by the MarkitSERV network.”