Bank of America joins CLS cross currency swaps service

CLS Group on Wednesday said cross currency swaps involve large initial and final principal exchanges, creating significant settlement risk exposure.

The CCS service mitigates these risks by settling payment instructions on the CCS principal exchanges through a payment-versus-payment (PvP) settlement mechanism, the London-based post-trade specialist said.

“The settlement process is designed to ensure both sides of the swap settle simultaneously, thereby eliminating counterparty failure risk on these payments. The service improves banks’ settlement efficiency as increasing foreign exchange volumes attract scrutiny of settlement risk by policymakers.”

Lisa Danino-Lewis, chief growth officer at CLS, said: “With FX trading volumes at record levels and the average daily settled value continuing to grow, mitigating settlement risk has never been more important. The continued expansion of our CCS service, alongside Bank of America’s go-live, demonstrates meaningful progress in reducing risk across the FX market.”

The UK-based post-trade infrastructure provider said its CCS service can be used in conjunction with OSTTRA’s MarkitWire platform to integrate CCS flows into CLSSettlement.

“Participants can benefit from multilateral netting for their FX transactions, optimising liquidity and significantly reducing daily funding requirements.”

CLS said the average daily settled value of CCS submitted to CLSSettlement increased by 87% in 2025. “This growth supports the efforts of policymakers and regulators to promote wider adoption of PvP as a key tool in reducing settlement risk.”

“In an environment of heightened market volatility and increasing intraday liquidity demands, reducing unsecured settlement risk is a priority. This milestone demonstrates our commitment to reducing counterparty risk while delivering liquidity efficiencies that will support the continued growth of our FX business,” said Carlos Fernandez-Aller, co-head of Global FICC Macro at Bank of America.

The UK firm said FX markets saw daily turnover reach about $9.6 trillion (£7.2 trillion) in April 2025, a 28% rise compared with the 2022, according to the Bank for International Settlements (BIS) 2025 Triennial Survey.

BNP Paribas, Credit Agricole CIB and Natixis CIB in March adopted the CLS CCS service in an effort to expand the adoption of PvP settlement in forex derivatives.

Meanwhile, the Depository Trust & Clearing Corporation (DTCC) in May announced that the US Securities and Exchange Commission (SEC) approved an application from its subsidiary National Securities Clearing Corporation (NSCC) to go live with a new client access model for the SFT Clearing Service.