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The In/Out Swap service is an additional liquidity management tool which helps financial institutions manage intraday liquidity effectively..
How It Works
The In/Out Swap is designed to reduce the payment obligations to CLS and to mitigate liquidity pressures. An In/Out Swap is an intraday swap consisting of two equal and opposite FX transactions that are agreed as an intraday swap.
One of the “legs” is settled inside CLS in order to reduce each Settlement Member’s net position in the two relevant currencies. The other “leg” is settled outside CLS.
The combined effect of these two transactions is a reduction in the intraday funding requirements of the two Settlement Members, while leaving the institutions’ overall FX positions unchanged. On average, In/Out Swaps reduce payment obligations in CLS by 75%, which results in a funding requirement in CLS of less than 1% of the total gross settlement value.
As In/Out Swaps reduce these "in-CLS" cash positions as well as the corresponding liquidity positions outside of CLS, Members can more easily manage liquidity flows for their non-CLS needs, as well as in the CLS system.