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CLS (Continuous Linked Settlement)

By Jarosław Wasiński • Published: • Updated:
A foreign-exchange settlement infrastructure whose payment-versus-payment mechanism makes settlement of one currency conditional on settlement of the other for eligible transactions. This addresses principal settlement risk on covered payments. It does not remove market, liquidity, operational or all counterparty risks, and not every FX transaction uses CLS.
Example. Model: A delivers EUR 100,000 and B delivers USD 110,000. Under PvP, final payment of either currency is conditional on final payment of the other. This does not promise settlement access for every pair or participant.

What PvP provides

Payment-versus-payment links payment finality and eliminates the risk of losing paid principal because only one leg is delivered within that mechanism. Agreeing a rate and instructing a payment do not by themselves establish such settlement. CLSSettlement uses PvP for eligible transactions.

Access conditions and remaining risks

Establish currency and product eligibility and whether participation is direct or indirect. Continue to assess liquidity needs, operational risk and transaction replacement cost. PvP and a central counterparty, or CCP, perform different functions. CLS is not a compensation scheme for a CFD broker’s clients.

Source and related concept

Reference: BIS: FX settlement risk and PvP. Checked 11 October 2026. See FX settlement risk and value date.

Netting and contingent payment

Reducing many obligations to smaller net amounts can lower cash needs, while PvP controls the conditional finality of the two currency payments. Both mechanisms can be present without being interchangeable. Verify the actual method for the covered transaction rather than infer it solely from a counterparty’s name.

FAQ

Is PvP the same as netting?

No. Netting reduces payment amounts; PvP links final payments conditionally. A system may use both functions.

Does CLS protect a CFD account balance?

It is neither negative balance protection, client-money segregation nor a compensation fund. It concerns specific currency-settlement infrastructure.

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Jarosław Wasiński

Editor-in-chief, ForexMechanics.com • Macro & FX analyst

Independent analyst and practitioner with over 20 years of experience in financial markets. Actively involved in Forex since 2007, with a focus on fundamental analysis, OTC market structure, and disciplined capital risk management.

  • Creator and editor-in-chief of MyBank.pl, providing reliable financial education since 2004.
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