For specific details on how to begin settling payment instructions via CLS, please contact your custodian bank to establish whether it offers CLS settlement services.
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CLS is the established market standard for FX settlement within the banking community.
Participating banks use CLS to settle the vast majority of their eligible payment instructions relating to FX transactions.
The reduction in trade processing costs due to liquidity and operational efficiencies derived from CLS has helped banks to achieve significant volume growth without increasing the number of processing staff employed.
This has not only supported significant growth of the FX industry as a whole but has also delivered significant efficiency gains to buy-side participants.
In addition to mitigating settlement risk, CLS-enabled banks also receive other unique benefits:
- Operational efficiency and cost savings
- Active management of settlement process
- Minimized interest charges
- Improved liquidity management
- Increased reconciliation speed
- Increased trading lines
Banks can either become a direct participant in CLS as a CLS Settlement Member or use a CLS Settlement Member as a third party service provider.
Using CLS as a third party is simple. Your selected CLS Settlement Member provides you with a system interface that allows you to submit your trades and see real-time trade status and settlement information. Your service provider will then submit payment instructions relating to your trades on your behalf. In many cases, a service provider will allow you to use your existing nostro accounts for CLS funding purposes. As a first step, establish whether your clearing banks offer CLS settlement services.