CLS welcomes first Taiwanese bank to CLSNet
Taipei Fubon Bank, a leading bank in Taiwan, is the first Taiwanese bank to commit to using CLSNet, CLS’s bilateral payment netting calculation service for over 120 currencies.
Taipei Fubon Bank is the latest participant to join the growing CLSNet community, which includes eight of the top 10 global banks.1 The service has experienced a significant rise in adoption over the past eighteen months, reporting record volumes and growth. The average daily notional value of net calculations in CLSNet have consistently exceeded USD105 billion in the last 12 months, and in September 2023 it reached a record daily notional of USD367 billion netted.
CLSNet offers standardization and automation through a centralized platform which mitigates risk, reduces operational costs and optimizes liquidity for a growing network of FX market participants. As settlement risk in the FX market continues to be a focus, especially in emerging market currencies and other growing segments of the market, participants are looking for ways to mitigate risk effectively via automated post-trade services such as CLSNet.
Lisa Danino-Lewis, Chief Growth Officer, CLS, commented, “We are delighted to welcome Taipei Fubon Bank, our first Taiwanese bank, to the CLSNet global network. This latest addition underscores the growing focus from FX market participants on the importance of risk mitigation, operational efficiency and liquidity management. At CLS, we are committed to growing CLSNet and are excited to further expand our services in the Asia Pacific region.”
James Wang, Head of Operations, Taipei Fubon Bank, added, “By becoming a participant in CLSNet, we will be able to access unparalleled levels of standardization and centralization in our post-trade processes. Furthermore, joining the service enhances our operational efficiencies, reduces risk and lowers our costs.”
“By becoming a participant in CLSNet, we will be able to access unparalleled levels of standardization and centralization in our post-trade processes.”
CLSNet also supports FX market participants’ adherence to the FX Global Code, particularly to Principles 35 and 50,2 as all trade instructions sent to CLSNet are validated and matched up to the pre-determined cut-off times between counterparties for each currency. This ensures that only matched trade instructions are included in the automated net calculation and that there is a single common record of the net payment obligations. By automating the netting process via a centralized platform, users benefit from greater operational efficiency and increased risk mitigation for currencies that are not currently eligible for CLSSettlement.
1 According to the 2022 Euromoney Foreign Exchange Survey2 Principle 35 provides that market participants should reduce their settlement risk as much as practicable and encourages the use of automated settlement netting systems. Principle 50 provides that market participants should properly measure, monitor and control their settlement risk and includes recommendations concerning the confirmation of bilateral net amounts and the agreement of predetermined cut-off points.