CLS Foreign Exchange Settlement Platform Partners IBM for Blockchain-Based Netting Service
Continuous Linked Settlement (CLS ), a New York-based financial institution that facilitates settlements for foreign exchange (FX ) firms is set to utilize IBM blockchain platform for handling its netting services, reported Computer Business Review on November 14, 2016.
CLS Joins Blockchain Technology Bandwagon
CLS, the world’s leading foreign exchange (FX) settlement services provider, has reportedly revealed it will launch its distributed ledger technology (DLT) powered netting service shortly.
For the uninitiated netting in this context, is the process of offsetting the value of multiple positions or positions due to be exchanged between two or more entities.
For instance, in the financial ecosystem, to account for currency volatility brought about by timezone difference, netting is used to determine the party which is owed remuneration in a multi party contract.
Per sources close to the matter, the firm’s Chief Strategy Officer, Alan Marquard has hinted that the netting service will utilize IBM’s blockchain platform which is based on Linux’s Hyperledger Fabric to reduce the dispute resolution times from the current 40 days to less than ten days.
Present at the recently organized IBM Think conference in London, Marquard reportedly made it clear to a packed audience that the firm which settles $5 trillion worth of transactions daily, will soon launch the first blockchain-based “enterprise-level, open-for-business service” in the financial markets.
CLS DLT Integration Taking it Step by Step
While blockchain technology has proven it has the potentials to handle vast amounts of transactions, Marquard has however reportedly said that the CLS blockchain system would start on a tiny scale and increase over time.
As stated in the CLS-IBM whitepaper , the latter’s blockchain platform can handle the 2.9 million daily transactions that lead to an estimated 25,000 disputes every year and tie up at least $100 million in the capital.
Both parties firmly believe that IBM’s blockchain solution will drastically reduce dispute resolution time while also improving capital efficiency by a whopping 40 percent.
“People in the markets presently spend thousands and thousands on reconciliation and even litigation, trying to settle every little dispute,” said Marquard, adding, that for blockchain technology to effectively transform the markets, it is essential for developers to understand and have respect for business knowledge completely.
IBM occupies the frontline in the DLT ecosystem, and the firm has developed highly functional blockchain systems for a good number of businesses and even nation-states in recent times.
Earlier in October 2018, BTCManager informed that Dubai had joined forces with IBM to launch a government-backed blockchain platform in the Middle East.