CLS will be collaborating with IBM to provide a blockchain app store which will be called CLS LedgerConnect. CLS is a global foreign exchange that was started in order to eliminate the risk of an FX trade failing without paying its side of a transaction.
Shared Distributed Ledger Network
CLS has announced that LedgerConnect was developed in order to provide banks, side firms, and software vendors the opportunity of deploying, sharing and consuming services that are on a distributed ledger network that is shared. The platform will enable financial institutions to get services including KYC (know your customer), market data, sanctions screening, collateral management etc.
In its announcement, CLS said that by them providing a single platform where these services are available an organization will be able to focus on other business objectives which, in turn, allow them to be more operationally efficient while at the same time save costs across asset classes.
Nine financial institutions are currently taking part in the proof of concept (PoC) including Barclays and Citi. The services offered on the platform has been sourced from various different vendors including IBM, Baton Systems, OpenRisk, Calypso, MPhasis, SynSwap among others.
Blockchain Operations To Be Segregated From Other CLS FX Transactions
Keith Bear, who is the vice president of Global Financial Markets, IBM, said that they used their experience in blockchain which spans over the past few years in order to develop the network. He said that they will be expecting Fintechs, software companies and banks which have developed apps to be willing to use the platform and thus build a network that enables easy identification of the apps available as well as facilitate connection with other banks at the click of a button.
He added that LedgerConnect will be connecting providers and app consumers through combining the app store with secure infrastructure and managed network services. He also said that there will be segregation between the blockchain operations and CLS FX transactions saying that this initiative is a way of CLS using its market position and connections to funding managers while at the same time leveraging its market ownership.
Alan Marquard, who is CLS’ Chief Strategy and Development Officer, said that the LedgerConnect was a way for CLS to explore ways that they could provide safe and robust solutions as well as cordoning off the financial markets from the risk of other different firms operating in it. He also added that though the platform is still in its early stages of development, they expect that it will be able to provide enhanced efficiencies and also deliver economies of scale for those who will utilize it.
Applicable To Other Areas Of The Market
Even though LedgerConnect has to be hailed as focusing mainly on the capital markets and wholesale banking, it can also be applied in insurance and retail banking areas including digital identification, regulatory reporting, and mortgage.
Bear said that the platform is looking to harness the benefits of blockchain even though there were cynicism and inertia in that area. The LedgerConnect’s success will be largely dependent on the success of the PoC and the banks’ willingness to continue on past that.