Continuous linked settlement
The primary objectives of Continuous Linked Settlement (CLS) are to:
- Eliminate the inherent settlement risk from the current foreign currency settlement processes
- Provide a mechanism for containing any systemic risk arising from the failure of a major market participant
This initiative was implemented in 2002 and is endorsed by the G10 central banks and lead regulators.
We're at the forefront
We're deeply committed to this industry initiative since its inception in 1997 and hold full shareholder status in the CLS Bank (CLSB). We operate as a full settlement member within CLSB and extend comprehensive third party services to our clients, thus enabling them to take full advantage of the settlement risk benefits associated with foreign exchange (FX) settlement through CLS.
How CLS operates
CLS has already changed the way banks conduct and settle their FX settlement business. For the first time 'payment-versus-payment' (PvP) has been introduced into the foreign exchange settlement process.
The CLS Bank (CLSB) provides the necessary account structure and mechanism through which the separate payment legs of an eligible foreign exchange trade are simultaneously exchanged (using a payment-versus-payment process), thus eliminating the associated settlement risk.
Similarly, all funding obligations are discharged by the use of an overlapping window for the RTGS systems in the CLS countries.
We provide custody and clearing services, as well as full fund services in 11 domestic onshore markets across our footprint.
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