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Systemically Important

In July 2012, the US Financial Stability Oversight Council designated CLS as a systemically important Financial Market Utility (FMU).

» Press Release

 History 


CLS was established in 2002 as a private sector initiative to mitigate settlement risk in the FX market and this remains our core mission today.

Created as a result of unprecedented cooperation among the global FX community, the impetus behind the launch of CLS came from regulatory concern regarding the potential for FX settlement risk to be a major source of systemic risk. This was underlined by the failure of Bankhaus Herstatt in 1974, which challenged the strength of the international banking community and threatened confidence in the global payment system.

A Brief Timeline

   
December 2013 CLS completes net capital raise of £160 million which enables it to it to comply with increased regulatory capital requirements, meet operational needs and establish an appropriate capital structure to benefit from future growth in the global FX market
September 2013 CLS introduces Same-Day Settlement for US and Canadian dollar trades
June 2013  Natixis becomes a Settlement Member 
May 2013  CLS settles a record 2,978,118 payment instructions in one day – 14% more than the previous high (includes FX Settlement and CLS Aggregation Service) 
February 2013 ACI launches its New Model Code which recommends "Institutions active in FX trading should be CLS participants where possible"
January 2013 CLS settles a total of 2,621,054 instructions in one day – a record volume for the service (includes FX Settlement and CLS Aggregation Service)
November 2012  Swedbank becomes a Settlement Member
July 2012 CLS is designated as a systemically important Financial Market Utility (FMU)
April 2012 CPSS and IOSCO publish their final report outlining new and more demanding international standards for financial market infrastructures (FMIs): Principles for financial market infrastructures
September 2011 CLS settles 2,180,686 payment instructions in one day – a record volume for the service (includes FX Settlement and CLS Aggregation Service)
August 2011 Lloyds becomes a Settlement Member
April 2011 Barclays joins the CLS Aggregation Service
March 2011 CPSS and IOSCO publish a consultative report outlining new and more demanding international standards for FMIs: Principles for Financial Market Infrastructures
February 2011 Toronto Dominion becomes a Settlement Member
December 2010 FX trading in the world’s financial markets totals USD 3.981 trillion per day – Bank for International Settlements Triennial Central Bank Survey of Foreign Exchange Derivatives Market Activity in 2010
May 2010 During a period of market volatility, CLS settles an average of over 1 million payment instructions per day with an average daily value of
USD 4.2 trillion
January 2010 CLS Aggregation launched to address the capacity challenges faced by banks resulting from the tremendous growth in FX market participation from hedge funds, algorithmic traders and retail and institutional clients
September 2008 Following the collapse of Lehman Brothers, market sentiment deteriorated rapidly and money and capital markets were brought to a virtual standstill. The FX market continued to function, without disruption, throughout the market turmoil that followed. Many have attributed this stability to the role played by CLS the service worked exactly as designed recording a new peak volume of 1.5 million payment instructions settled in the week following the collapse of Lehman Brothers
May 2008 Two more currencies added Israeli shekel and Mexican peso – bringing the total to 17 currencies
May 2008 CPSS publishes a report: Progress in Reducing Foreign Exchange Settlement Risk which renews the focus on FX settlement risk reduction, commends the CLS payment versus payment architecture and sets out steps to further mitigate settlement risk
March 2008 CLS settles USD 10.3 trillion in one day – a record value for the service
December 2007 Settlement extended for certain over-the-counter (OTC) credit derivatives – a partnership with the Depository Trust & Clearing Corporation (DTCC)
November 2007 CLS settles over one million payment instructions in one day – a record volume for the service
September 2005 Settlement extended for an additional FX product non-deliverable forwards (NDFs)
December 2004 A further four more currencies added (Hong Kong Dollar, Korean Won, New Zealand Dollar, South African Rand)
February 2004 First fund FX transaction settled – investment management community can use CLS to actively manage FX settlement risk
September 2003 CLS adds four more currencies (Danish krone, Norwegian krone, Singapore dollar and Swedish krona)
September 2002 CLS is launched with 39 Members and seven currencies (Australian dollar, Canadian dollar, euro, Japanese yen, Swiss franc, UK pound sterling, US dollar)
March 1996 CPSS publishes a report: Settlement Risk In Foreign Exchange Transactions (the Allsopp Report) – a strategy for addressing FX settlement risk
June 1974 Bankhaus Herstatt fails find out more in the BIS paper: Bank Failures in Mature Economies