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By Felicity Ussher, 21 October 1999 00:15

NEWS The world's biggest commercial banks are poised to launch a global system for settling foreign exchange deals. Over 60 leading banks have set up the Continuous Linked Settlement system (CLS) - the first attempt at a real-time, closed network for international settlements. The move follows concern among regulators that under the current system - where transactions are settled at a national level at the end of each day's trading - there is too much of a delay across international time zones. That means the purchasing and sales end of a transaction are often not completed at the same time. The new system is designed to eliminate that problem, with the first pilot trial scheduled to start in March 2000. The trial will be managed by CLS Bank, which operates from London but is regulated by the US Federal Reserve. CLS aims to ensure that if a bank goes bust before a transaction has been settled, it does not have a knock-on effect on the market - as happened in 1974 with German bank, Herstdatt. With approximately three trillion dollars traded each day across national borders, regulators are keen to remove that risk from the current system. CLS' hardware and software is being developed by IBM, while French IT services firm ATOS, will develop the interfaces. The basic network connectivity for the bank will be provided by SWIFT - which has been running global payments networks since the 1970s. Member banks, including Barclays, Citibank and JP Morgan will be shareholders in the project. They will take on responsibility for any remaining settlement risks. Full roll out is due in October 2000.