SWIFT / cross-border
PAYMENTS SIGNAL · REFERENCE CARDCLS: payment-versus-payment FX settlement
Bank Alfa and Northstar Bank settle a matched EUR/USD trade through CLS, the payment-versus-payment settlement service. Each bank pays in its currency leg through a central-bank real-time gross settlement system; CLS releases the two legs together so neither side can pay without being paid. (SYNTHETIC / TRAINING ONLY)
Actors
- Bank Alfa (EUR seller)bank
- Northstar Bank (USD seller)bank
- CLS (PvP settlement service)infrastructure
- EUR RTGS (central-bank system)infrastructure
- USD RTGS (central-bank system)infrastructure
Messages
- FX settlement instruction
The sequence
| # | Step | Route | Kind |
|---|---|---|---|
| 1 | FX settlement instruction — The matched FX trade is submitted to CLS | Bank Alfa → CLS | message |
| 2 | Pay-in schedule — CLS builds the pay-in schedule | CLS | internal |
| 3 | EUR pay-in — Bank Alfa funds its euro leg | Bank Alfa → EUR RTGS | settlement |
| 4 | USD pay-in — Northstar Bank funds its dollar leg | Northstar → USD RTGS | settlement |
| 5 | Both legs funded? — CLS checks both legs are funded | CLS | internal |
| 6 | PvP settlement — Both legs settle simultaneously on CLS books | CLS | settlement |
| 7 | Pay-outs — CLS pays out the settled balances | CLS | posting |
| 8 | Final — Positions are final on both sides | CLS | internal |
Exception rails
| Rail | Trigger | Where the money ends up | Next action |
|---|---|---|---|
| Leg unfunded: the linked pair does not settle | Northstar cannot fund its dollar leg in time — a liquidity shortfall or a missed pay-in deadline leaves one side of the pair unpaid. | Bank Alfa's euros are returned to it; Northstar never funded its dollars. Neither leg moved between the banks. · No PvP settlement occurred for this pair — it was held out and the funded leg was returned, not reversed after the fact. | Northstar — Northstar sources the liquidity and the trade is resubmitted for a later settlement, or the banks settle it bilaterally outside CLS. |