CLS, a financial market infrastructure group delivering settlement, processing, and data solutions, today announces that Bank of America (BofA) has gone live on its Cross Currency Swaps (CCS) service. One of the world’s leading financial institutions, BofA joins other global banks using the platform to reduce settlement risk and improve efficiency amidst growing FX volumes and increased scrutiny of settlement risk by policymakers.
Cross currency swaps involve large initial and final principal exchanges, creating significant settlement risk exposure. In addition, settling these trades on a gross bilateral basis leads to operational inefficiencies and liquidity constraints. CLS's CCS service, an extension of CLSSettlement, mitigates these risks by settling payment instructions on the CCS principal exchanges through a payment-versus-payment (PvP) settlement mechanism, designed to ensure both sides of the swap settle simultaneously, thereby eliminating counterparty failure risk on these payments.
The CCS service can be used seamlessly in conjunction with MarkitWire’s post-trade processing platform to integrate CCS flows into CLSSettlement. Participants can benefit from multilateral netting for their FX transactions, optimizing liquidity and significantly reducing daily funding requirements.
CLS’s CCS service continues to see significant growth, with the average daily settled value of CCS submitted to CLSSettlement increasing 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.
According to the Bank for International Settlements 2025 Triennial Survey, FX markets saw daily turnover reach about USD9.6 trillion in April 2025, a 28% rise compared with the 2022 survey. As FX markets expand and risk exposure increases, the demand for safe and efficient settlement mechanisms continues to grow, particularly among financial institutions seeking to align with the best practices outlined in Principle 35 of the FX Global Code.1
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.”
Carlos Fernandez-Aller, co-head of Global FICC Macro at Bank of America, commented: “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 on cross currency swap initial and final principal exchanges while delivering operational and liquidity efficiencies that will support the continued growth of our FX business.”
- Principle 35 states, inter alia:
Where practicable, Market Participants should eliminate Settlement Risk, for example by using settlement services that provide PvP settlement.
Where Settlement Risk cannot be eliminated, Market Participants should reduce the size and duration of their Settlement Risk as much as practicable. The netting of FX settlement obligations (in particular the use of automated netting systems) is encouraged.
