Changes to the FX Global Code welcomed by CLS
CLS, a financial market infrastructure delivering settlement, processing and data solutions across the global FX ecosystem, has welcomed changes to the FX Global Code (the Code) which place greater emphasis on the use of payment-versus-payment (PvP) settlement mechanisms where available, and provide more detailed guidance on the management of settlement risk where PvP settlement is not used. The amendments were approved at the Global Foreign Exchange Committee meeting on 28 June 2021.
The specific changes to the Code in relation to the mitigation of FX settlement risk and best practice in post-trade processing are:
- Principle 35: strengthening the importance of PvP settlement to mitigate settlement risk where possible, and the use of automated settlement netting systems where it is not.
- Principle 50: more detailed guidance on the measurement, monitoring and control of settlement risk where PvP settlement is not available, with a greater emphasis on the confirmation process of bilateral netting and the agreement of predetermined cut-off points.
CLSNet is a standardised, automated bilateral netting service for FX trades settling outside the CLSSettlement service in approximately 120 currencies, and supports Principle 35 and Principle 50 of the Code. All trades sent to CLSNet are validated and matched up to the predetermined cut-off times between counterparties for each currency. This ensures only confirmed trades are included in the automated net calculation and that there is a single common record of the net payment obligations. By automating the netting process via a centralised infrastructure, users can benefit from greater operational efficiency and increased risk mitigation for currencies currently unable to settle in CLSSettlement, the infrastructure's multi-currency settlement system.
"We fully support the changes to the Code as it will encourage FX market participants to explore ways to mitigate risk further and reduce operational costs by adopting a best practice approach to FX settlement risk management and netting," said Marc Bayle de Jessé, CEO of CLS. "In support of these changes to the Code, and in order to make access to PvP settlement mechanisms more widely available, we are working with the market to evaluate potential PvP solutions for currencies that are currently unable to settle in CLSSettlement. In late 2020, we established an industry working group and are actively exploring opportunities with the market to mitigate settlement risk further and unlock liquidity. We are also analysing trade data from our settlement members to contribute to the design of any new solution and further the industry’s understanding of market participants’ settlement practices. We look forward to updating the GFXC and its members on these initiatives in due course."
Mastercard launches gateway to access UK real-time payments infrastructure
Mastercard has launched a real-time payments gateway service, PayPort+, which provides flexible access into the UK’s real-time payments infrastructure for financial institutions and payment service providers. The solution, powered by Vocalink, a Mastercard company, and Form3, a technology partner, combines cloud native technology with the highest levels of security, availability, and operational services standards. Mastercard has selected Form3 as the technology partner for the implementation of its new PayPort+ platform.
"Now more than ever, people and businesses need to be able to rely on the payments network for speed, convenience and security - not just in the UK but around the world," said Gregor Dobbie, CEO of Vocalink. "The launch of our next generation PayPort+ service, which we built in collaboration with Form3, is a part of our multi-rail strategy to enhance payment flows for our customers and modernise payments for everyone."
PayPort was launched in 2016 to offer financial institutions connectivity into the UK Faster Payments network. Through this next generation of PayPort+, Mastercard says that these institutions will benefit from flexible connectivity options, including MQ, Restful APIs and Microservices. PayPort+ is now live with two UK financial institutions, including Nationwide Building Society, processing real-time payments into the UK Faster Payment service.
Bill.com to acquire accounts receivable software firm Invoice2go
Bill.com, a provider of cloud-based software that digitises and automates complex back-office financial operations for small and midsize businesses (SMBs), has announced it has signed a definitive agreement to acquire Invoice2go in a stock and cash transaction valued at approximately US$625m. Invoice2go is a mobile-first accounts receivable (AR) software provider that supports small businesses to grow their client base and manage invoicing and payments. With offices in Sydney, Australia and Palo Alto, California, Invoice2go serves a large global customer base of small businesses.
The acquisition will add to Bill.com’s current AR offering. Invoice2go’s solution is designed to make it easy for businesses to engage and interact with their customers, generate professional invoices, and simplify their AR operations through mobile and desktop solutions.
"We are investing to accelerate the adoption of our accounts receivable offering," said René Lacerte, CEO and founder of Bill.com. "The acquisition of Invoice2go will bring a leading product and a very talented team to Bill.com. It supports our strategy to invest in our platform to be a one-stop shop solution for businesses to transform their financial operations, make and receive payments, and manage their cash flow. Invoice2go’s international team and customer base will enable us to serve more businesses around the globe."
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