# #21: Rethinking FX Settlement Cycles

**With:**  
Emanuel Vila (CLS)

In Session #21, **Emanuel Vila** (Director of Corporate Strategy & Innovation, CLS) joins FNA to discuss the findings of a landmark joint study: **"Reimagining same-day FX: Exploring the case for additional settlement cycles."** Using a simulation of the CLS system—which settles $7 trillion daily—the research quantifies a critical but often overlooked reality: the more frequently you settle, the less you can net.

The study reveals that while adding cycles later in the day could bring a portion of the **$500 billion same-day FX market** under PvP protection, it comes at a high cost. For instance, moving to three cycles per day would increase liquidity requirements by nearly **$48 billion**. This session provides the empirical data needed to move beyond the hype of "instant" payments and toward a model of "smart" settlement that balances systemic risk reduction with global liquidity constraints.

**Key Discussion Points:**

- **The Netting Efficiency Trap:** Why increasing the number of daily settlement cycles reduces the time for offsetting flows to accumulate, forcing banks to fund more of their obligations in gross terms.
- **T+0 Market Potential:** Identifying the opportunity to capture same-day FX volumes—currently settled bilaterally and without PvP protection—into a secured environment.
- **The Liquidity Delta:** Analyzing the specific funding increases (ranging from $16.9B to $48B) required for participants under various multi-cycle scenarios.
- **Operational Feasibility:** Why the study suggests that more than three cycles per day may be unmanageable for the global operational infrastructure.
- **G20 Roadmap Alignment:** How additional CLS cycles could help meet global targets for faster, cheaper, and more transparent cross-border payments.
- **The "Digital Twin" Methodology:** How agent-based simulation allows CLS to "test-drive" systemic changes without risking $7 trillion in daily value.

**Watch on Demand:**
Listen on: [Spotify](https://open.spotify.com/episode/4WFjxYgkmxRvTVWH3nfH3J?si=0f19cd4b50554a0e) | [Apple Podcasts](https://podcasts.apple.com/gb/podcast/payment-systems-broadcast-21-rethinking-fx-settlement/id1772649634?i=1000702181024) | [Amazon Music](https://music.amazon.co.uk/podcasts/93293cc8-fa9c-41a8-a3d7-86b413d78941/episodes/9600da41-6908-4b0a-ad86-8c64f5871a09/fna-broadcasts-payment-systems-broadcast-21---rethinking-fx-settlement-cycles)