Société Générale has become the latest firm to go live on CLS’ cross currency swaps (CCS) service. The firm aims to leverage CCS to optimise liquidity and mitigate settlement risk, says Pierre-Jean Benazech, Société Générale’s global head of cross CCY swaps trading in a statement. The bank sees the service’s payment-versus-payment (PvP) settlement system and netting capabilities as a “positive step forward” for its foreign exchange (FX) operations.
The CCS service was designed to work seamlessly with post-trade processing platform MarkitWire to integrate CCS flows into CLSSettlement. CLS claims that participants “benefit from multilateral netting against all FX transactions”, which optimises liquidity and reduces daily funding requirements. This is especially advantageous because “CCS trades have significant settlement risk exposure due to the high value of the initial and final principal exchanges”. In addition, operational inefficiencies and liquidity constraints tend to occur when these trades are settled on a gross bilateral basis.
