Bank of America adopts CLS's PvP system to cut FX trading risks
Bank of America has launched a new service to reduce risk in foreign exchange (FX) trading. The bank is now using CLS’s Cross Currency Swaps (CCS) platform, which settles transactions on a payment-versus-payment (PvP) basis. This move comes as daily FX trading volumes hit record highs, reaching $9.6 trillion in April 2025. The CCS service allows Bank of America to settle cross-currency swap principal exchanges through CLSSettlement’s PvP mechanism. This system cuts counterparty risk by ensuring that payments are exchanged simultaneously. Carlos Fernandez-Aller, co-head of Global FICC Macro at the bank, stressed the need to reduce unsecured settlement risk in the growing FX market.
The platform also integrates with OSTTRA MarkitWire, enabling automated post-trade processing and multilateral netting. This setup improves efficiency for participating institutions by lowering funding requirements and streamlining operations.
Regulators have been pushing for wider adoption of PvP settlement in FX markets. Lisa Danino-Lewis, Chief Growth Officer at CLS, noted that mitigating settlement risk is increasingly important given the surge in trading volumes. Daily FX turnover has risen by 28% since 2022, making risk management a top priority. The expansion of CLS’s CCS service marks a step forward in reducing systemic risk across the FX market. Bank of America’s participation highlights growing industry support for safer settlement practices. The system’s automation and netting features are expected to further improve operational efficiency for major financial institutions.
