To install and operate CLS, it helps to have an in-house bank. "Having an in-house bank complements CLS very well because it tells me you already have centralized operations," says Steinmann. "For a client who has 15 different treasury systems, whatever they're implementing–whether it's CLS or anything else–is going to be more complicated."

That said, CLS sources claim that four more companies are slated to join in the next few months, with Hewlett-Packard and Peugeot said to be particularly interested. Neither firm returned calls seeking comment.

So what type of company should consider CLS at this point, and is there anything CLS could do to make itself more attractive? Created by foreign exchange bank heavyweights such as Citibank, Bank of America, JPMorgan Chase and HSBC, CLS has 56 core members and 132 third-party users–all of which are banks, with the exception of Nike–and currently handles about one-half of all global currency trading volume. The system was developed to reduce risks that typically arise when parties in different time zones settle currency trades, but it was built for the banking community.

As a result, implementing CLS can be a tricky endeavor for companies: For example, while banks can easily connect with CLS counterparties using the SWIFT network, many corporates aren't SWIFT members or don't subscribe to the advanced SWIFT 200 series that banks take for granted.

But once CLS is in place, there are other challenges. Because CLS runs only 11 currencies–dollars from the U.S., Australia, Canada and Singapore, the euro, the yen, British sterling, the Swiss franc, the Danish and Norwegian krone and the Swedish krona–users must run a second separate foreign exchange system to handle non-CLS transactions. There are plans to add the South African rand, South Korean won and dollars from New Zealand and Hong Kong by the end of the year, but even then not all counterparties are CLS-compatible.

These problems are difficult but not insurmountable. One hurdle, however, poses the biggest threat to further proliferation: Eliminating foreign exchange settlement risk is simply not a high priority for corporate treasurers, who usually rely on their banks to ensure that transactions proceed smoothly. "There are very few corporates out there for whom going to CLS would be an immediate, obvious no-brainer," says Brian Wedge, global products manager at JPMorgan. "We're trying to make sure our clients use CLS when it's the appropriate thing for them to use and not when it's a trophy to put on show for everyone else."

When is it appropriate? Non-financial companies that would benefit the most from CLS are large multinationals with significant volumes of foreign exchange flows–at least 10 trades a day each worth at least $10 million–and centralized treasuries. Beyond that, suppliers say eligibility depends on such factors as a company's appetite for risk and access to alternative forex technology. "CLS may have higher operational value to people who are less automated," says Jonathan Butterfield, head of marketing at CLS. "The straight-through processing benefits seem to be more obvious to people who were [technologically] less sophisticated worse off to start."

CLS shareholders report that corporates have been mainly attracted to CLS's straight-through processing capabilities and multilateral netting advantages. Operational management becomes a more transparent process because CLS allows them to view transaction status on foreign exchange deals in real time and provides netted balances in each currency on settlement date. Users view their net cash positions early in the morning on settlement date and can then spend the rest of the day making necessary adjustments, like covering short positions. CLS also virtually eliminates payment and reconciliation errors, saving users money and time otherwise spent on inquiries.

Because liquidity management is a higher priority than FX risk elimination for most companies, HSBC's Muir says his sales team markets CLS primarily as a means for outsourcing treasury settlement. "The supplier will often give you a browsing mechanism to monitor the status of trades and the balances on your account. And so, that whole settlement process is much easier to handle," says Muir.

Although European CLS shareholders claim risk reduction is not a pressing concern for their corporate customers, U.S. bankers say the tighter regulation of recent years has created new priorities on this side of the Atlantic. "With all the focus around Sarbanes-Oxley in the Enron era, any initiative that provides audit and control is going to be very well looked upon by auditors," says Sue Hutchison, manager of FX products at Bank of America. "I've talked to people from treasuries who say: 'My CFO heard there is a risk reduction element to CLS, so I have to look at it,'" she says, pointing out that FX trades for many businesses constitute their biggest cash payments.

And there is an implicit stamp of approval that comes with CLS membership. "CLS member status involves pretty severe testing requirements. There is no other industry-level agent that does a third party check of operational capability," says Butterfield. "So [it represents] a very interesting endorsement of operational integrity."

How many corporates will decide to take advantage of these benefits is unclear. Butterfield says about 100 to 200 names would make prime candidates, but suppliers say the number of companies to join in the next couple of years is unlikely to top 50.

JPMorgan's Wedge says many banks and corporates have misconceptions about CLS, so JPMorgan's sales efforts have been focused on educating potential users. But because there is no financial incentive for banks to aggressively market the product, the outreach to potential American users has been slow.

Butterfield, who recently met with major U.S. companies to gauge their interest, says a lot of corporates have simply not been told about CLS. "One of my biggest concerns is how do I help or cajole settlement members to transfer the expertise they clearly built for the bank sales force to the corporate sales force," says Butterfield.

Regardless of whether CLS can add to its corporate membership, it seems clear that CLS is here to stay. The system processes more than 140,000 transactions a day with a gross value topping $1.4 trillion. By contrast, in adding a large multinational, CLS would only gain 50 to 100 trades a month, after netting.