One side of the swap is settled via CLS (the in leg), while the other side is settled on the same value date outside CLS via the traditional correspondent banking mechanism (the out leg).21 As a result of this swap, the negative (and positive) balances are reduced for both parties and so are the time-critical pay-ins to CLS in the next settlement cycle.22 The disadvantage of in/out swaps is that the out leg is settled through conventional correspondent banking arrangements and, thus, the participants are exposed to the full settlement risk.