Singapore/Hong Kong, 9 December 2021 – CLS has been awarded Market Infrastructure of the Year in the 4th Regulation Asia Awards for Excellence 2021 at an online ceremony on 9 December 2021.
CLS is a systemically important financial market infrastructure that operates the largest multi-currency cash settlement service in the world, known as CLSSettlement. On average, CLS settles approximately USD 6.0 trillion of payment instructions daily, or about 50 percent of global FX traded volumes for 18 currencies. Over 28,000 financial institutions use CLSSettlement, either directly or indirectly, including more than 70 of the world’s most significant financial institutions.
CLS addresses the most significant risk in the FX market – settlement risk – using a PvP mechanism to settle payment instructions simultaneously, in real time and with finality. Its use of multilateral netting enables firms to limit the funds they have to transfer to the net amount of their combined payment obligations in each currency, creating operational efficiencies and significant cost savings. CLS also offers a liquidity management tool which, when combined with multilateral netting, reduces settlement members’ funding requirements to less than 1 percent of the total value of all of their trades.
Amid calls from regulators and policymakers for increased adoption of PvP settlement mechanisms to mitigate global FX settlement risk, CLS has sought to add currencies to its settlement system and is in the process of onboarding the Chilean peso as its 19th currency. It has also launched an industry pilot to evaluate potential PvP solutions for currencies that are not eligible for CLSSettlement.
CLS has also been working to drive increased PvP adoption by buy-side firms through a market-wide engagement and education programme. In Japan, for instance, it has been working closely with regulators and has successfully onboarded over 500 Japan-domiciled funds on CLSSettlement.
“The work CLS is doing to enhance FX settlement risk mitigation across the world is of critical importance, as a disruption in the FX market would cause a global panic,” said one judge on the awards panel. “This risk has already been recognised by the BCBS [Bank for International Settlements] and other regulators. CLS is well placed to help address this risk, which is necessary to maintain global financial stability.”
In 2021, CLS also completed Convergence, its largest change initiative since the launch of CLSSettlement in 2002. Part of a multi-year technology investment programme, Convergence enables CLS to have greater control over application design, development and change delivery for its settlement solutions, as well as enhance monitoring, alerting and automation.
About the Regulation Asia Awards for Excellence 2021
The Regulation Asia Awards for Excellence recognises financial institutions, technology companies, legal and consulting firms, exchanges and other players that help to ensure the highest standards for regulatory compliance are upheld in the financial industry. Each year, senior industry practitioners serve on a judging panel to help assess and score each submission to determine the winning entrants.
For a full list of the award 2021 winners, visit www.regulationasia.com/awards.
About Regulation Asia
Regulation Asia is the leading source for actionable regulatory intelligence for Asia Pacific markets. With over 12,000 subscribers, including regulatory bodies, exchanges, banks, asset managers and service providers, Regulation Asia plays a key role in shaping the regulatory agenda.