The belief that OTC is more opaque and risky than trading on an exchange is, as we all know, tosh. CLS Bank has something to say on the issue: “The provision of trade data repositories that can ensure transparency of trading, achieve timely matching and confirmation, and provide full information on the size and structure of the market in one venue is attracting heightened regulatory interest. The need for such repositories is currently being prescribed for derivative markets.”
CLS adds: “For over seven years CLS Bank has operated its unique settlement service for the foreign exchange market to eliminate this market’s largest risk, settlement risk. Continued growth in participation has resulted in CLS Bank now settling nearly three quarters of the available eligible market trades. Inherent in the service’s operation is the matching and storage of every submitted trade, normally received by the service within 30 minutes of trade execution. These trades originate from CLS Bank’s member banks and over 6,000 other market participants. The storage of all past, present and future dated FX trades makes CLS the de-facto industry repository, already providing regulators and CLS with precise and comprehensive market data.” Paolo (see Tops and bottoms) has already been on asking if I can find his two trades from October 22.