David Puth: Over-the-Counter Credit Derivatives Payment Processing at CLS

In August 2012, David Puth assumed the role of chief executive officer for CLS Group Holdings AG. He formerly worked at State Street Corporation in Boston, where he served as head of global markets.

The majority of today’s over-the-counter (OTC) credit derivative transactions use Deriv/SERV to match and confirm them efficiently. Payments, however, generally come through in a fragmented manner due to a lack of integrated global payment processing options. CLS aims to address this issue through a direct link with The Depository Trust & Clearing Corporation Deriv/SERV’s Trade Information Warehouse.

When the warehouse centralizes updated information about a particular derivatives contract, it links the data to an electronic settlement process through CLS, which allows for automatic payment. Clients thus enjoy accurate and complete payment processing without uncertainty, as the system eliminates the need for bilateral settlement.

After the warehouse generates and sends payment instructions to CLS, the company notifies the involved parties, who subsequently process settlement through CLS’ multilateral, netted infrastructure. The system currently accepts payments in nine currencies.