CLS Annual Report and Consolidated Accounts

31 December 2018

At CLS we remain committed to our core mission and unique role of contributing to the safe functioning and stability of financial markets.

As the market evolves through structural change, regulatory reform, and new technology, we must also ensure we leverage our experience and substantial market intelligence to address the market’s wider settlement, processing and data needs. This has not, and will not, change.

As you will read in further detail in this report, our focus has been twofold: continue to invest in our infrastructure as well as develop and enhance our products. This will ensure we deliver rigorous, forward-looking solution that reduce risk and create efficiencies for our clients.

Investment has always been central to our approach to ensure the reliability and high quality expected of a financial market infrastructure.


Investment has always been central to our approach to ensure the reliability and high quality expected of a financial market infrastructure. 2018 marked the second year of Convergence: a multi-year project to modernize the underlying technology for the settlement business line, and the largest investment in our infrastructure since launch.This, combined with our investment in new products, will continue to have some adverse medium term impact on our financials.

This, combined with our investment in new products, will continue to have some adverse medium-term impact on our financials. We are launching these products at price points that reflect the scale we expect to achieve and at margins appropriate for a financial market infrastructure. This, alongside client adoption rates, that are rightly subject to a rigorous business case and acceptance testing, means that it may take several years for these products to achieve an adequate financial return. Therefore the challenge will remain for a number of years to come until these essential investment programs are completed. It will ensure both the resilience of the settlement business line and deliver a more comprehensive suite of FX post trade services.


In the long term this will ensure both the resilience of the settlement business line and a more comprehensive suite of FX post trade services.

We have maintained strong capital resources. At GBP235.7 million, our levels of capital are over 2.5 times in excess of minimum requirements as set out by our regulators. 

We will continue to evolve to address distinct market challenges, using our expertise and connectivity to deliver ambitious solutions that meet our clients’ needs.

Following David Puth’s departure in late 2018, Kenneth Harvey has assumed the role of Interim Chief Executive Officer (CEO). While Ken serves in this position, we will jointly execute his responsibilities as Chairman. Ken’s breadth of experience and in-depth knowledge of CLS makes him ideally suited to lead the organization as Interim Chief Executive Officer until a suitable long-term successor is found. Under Ken, the overall strategy does not change. Both the CLS Group Board and Executive Management Committee remain committed to delivering sustained growth, while balancing the resource, investment and regulatory requirements of our settlement business line. At the forefront of our strategy is the delivery of a high quality service our shareholders and settlement members expect, and this will remain our key area of focus throughout 2019.

As Co-Chairmen, we would also like to use this opportunity to thank our departing board members Gillian Lungley, Paul Riordan, Vidya Bittiandaand of course David Puth, who servedas CEO and board member for over six years. All have made invaluable contributions to the organization during their time on the Board. We thank them for their leadership andstewardship, and wish them every success in their future endeavors. We would also like to welcome Thomas Berkery, who was elected to the Board as a new Independent (Outside)Director on 16 October 2018 and is a member of the Audit and Finance Committee.

We will continue to evolve to address distinct market challenges, using our expertise and connectivity to deliver ambitious solutions that meet our clients’ needs. Following the launch of both CLSClearedFX and CLSNet in 2018, the focus will be on driving participation, while investing in our long-term future and the appropriate governance to support our growth ambitions and regulatory requirements. While there is still much to do, there is also significant opportunity for CLS to continue to build its position as a provider of trusted market solutions.

 



Bryan Osmar

CLS Group Holdings AG
Co-Deputy Chairman
27 March 2019

Richard Sears
CLS Group Holdings AG
Co-Deputy Chairman
27 March 2019

 

Annual financial report 2018