BNY Goes Live on CLSNet for FX Post-Trade Netting

BNY has gone live on CLSNet, CLS’s automated bilateral payment netting calculation service, as FX market participants focus on settlement risk and post-trade efficiency. The move brings one of the largest global custodians into a network that standardizes and automates post-trade matching and netting processes across more than 120 currencies. BNY will use CLSNet to manage currency flows that fall outside the CLSSettlement system, including emerging market and same-day FX transactions.

How CLSNet Reduces Settlement Risk

CLSNet is designed to reduce settlement risk by netting payment obligations between counterparties before settlement takes place. Instead of settling gross amounts, participants settle net positions, lowering the total value of payments exposed to risk.

The service standardizes post-trade processes that are often handled manually or through fragmented systems. Matching, reconciliation, and netting calculations are automated within a centralized framework. This approach is particularly relevant in currency pairs and trades not eligible for CLSSettlement, including many emerging market currencies and same-day transactions, which tend to carry higher operational and settlement risks due to lower liquidity and less standardized infrastructure.

By using CLSNet, participants can reduce the size and duration of settlement exposure, which remains a core concern for regulators and market bodies.

BNY’s Expansion Into Automated Netting

BNY will apply CLSNet to support risk mitigation, liquidity optimization, and operational efficiency across its FX activity. As a global custodian, BNY processes large volumes of cross-border currency flows on behalf of institutional clients.

Jason Vitale, Global Head of Execution Services at BNY, commented: “Going live on CLSNet represents an important advancement in how we optimize and safeguard our FX operations against settlement risk, while strengthening the CLS ecosystem and network effect of the service. This step reflects our commitment to helping our clients access markets more efficiently.”

The decision also strengthens the network effect of CLSNet. As more large institutions join, the potential for bilateral netting increases, improving overall system efficiency for all participants. For custodians and large banks, participation in such networks is tied to both internal risk management and external client expectations, as institutional clients increasingly expect service providers to adopt infrastructure that reduces operational risk and improves execution quality.

CLSNet Adoption Metrics and Market Growth

CLSNet recorded an average daily netted value of $177 billion over the past 12 months, representing a year-on-year increase of 9%. The network now includes the top 12 global banks and is available to a wider group of participants, including regional banks, funds, corporates, and non-bank financial institutions.

The growth reflects rising demand for automated post-trade services as FX trading volumes expand, particularly in emerging market and developing economy currencies. These markets often present higher settlement risks due to differences in infrastructure, time zones, and liquidity conditions.

Lisa Danino-Lewis, Chief Growth Officer at CLS, commented: “BNY, a key participant in the FX market and a significant global custodian, is a welcome addition to our network and marks another significant step in strengthening post-trade standards across the FX market. As adoption of our service continues to grow, the value of the network increases, enhancing operational resilience and efficiency across the FX industry.”

The inclusion of large custodians and global banks increases the effectiveness of netting services. A broader participant base allows more obligations to be netted, reducing the total amount of payments that need to be settled.

Settlement Risk and Regulatory Context

Settlement risk in FX markets remains a priority for policymakers and industry bodies. The FX Global Code outlines best practices, including the use of payment-versus-payment settlement where possible and the reduction of risk through netting when full elimination is not feasible.

Automated netting systems such as CLSNet are encouraged under these guidelines. By reducing gross payment exposures, they limit the potential impact of counterparty failure during the settlement process. This is particularly relevant in markets where payment-versus-payment settlement is not available or where trades fall outside standard settlement cycles, such as same-day trades and certain currency pairs that carry higher risk profiles.

Post-Trade Infrastructure as Competitive Differentiator

BNY’s move to CLSNet highlights how post-trade infrastructure is becoming a competitive factor in FX markets. While pricing, liquidity, and execution remain central, operational efficiency and risk management are increasingly part of how institutions differentiate their services.

For brokers, banks, and liquidity providers, the ability to process trades efficiently after execution affects costs, capital usage, and client outcomes. Automated systems reduce manual intervention, lower error rates, and improve scalability. The integration of services such as CLSNet into institutional workflows points to a broader shift toward centralized, automated post-trade environments designed to handle growing transaction volumes without increasing operational risk.

As FX markets continue to expand into new currencies and regions, the demand for standardized post-trade processes is likely to increase, with infrastructure providers positioning their services as part of that transition.