Société Générale has gone live on market infrastructure group CLS’ cross currency swaps (CCS) service.
CCS trades have notable settlement risk exposure linked to the high value of the initial and final principal exchanges. Settling these trades on a gross bilateral basis also results in operational inefficiencies and liquidity constraints.
The CCS service can be used in conjunction with post-trade processing platform MarkitWire to integrate CCS flows into CLSSettlement, providing the ability for participants to benefit from multilateral netting against all FX transactions.
As a result, this leads to an optimisation of liquidity, alongside a reduction in daily funding requirements.
“We look forward to leveraging CLS’s CCS service to optimise liquidity and mitigate settlement risk,” said Pierre-Jean Benazech, global head cross CCY swaps trading at Société Générale.
“The unique PvP settlement system and netting capabilities mark a positive step forward in our efforts to optimise our foreign exchange operations.”
Read more: Barclays connects to CLS’s cross currency swaps service
The service has experienced exponential growth, with the values of CCS submitted to CLSSettlement up 87% year-on-year in Q3 2024.
CLS added that the growth in its service also supports the efforts of policy makers and regulators who promote broader adoption of payment-versus-payment (PvP) mechanisms to reduce FX settlement risk and systemic risk in the OTC derivatives market.
“We are delighted that Société Générale has gone live on our CCS service. Participation in the service underscores its effectiveness in enhancing operational and liquidity efficiencies for CCS trades,” stated Lisa Danino-Lewis, chief growth officer at CLS.
“The growing adoption of this service as well as the growing values submitted indicate that FX market participants are actively pursuing innovative solutions to further reduce settlement risk and improve operational efficiency.”