CLS welcomes Sumitomo Chemical to CLSSettlement as a third-party participant
Fourth Japanese corporate and second manufacturing company to settle currency trades via CLSSettlement as a third party
CLS, a financial market infrastructure delivering settlement, processing and data solutions across the global FX ecosystem, announced today that Sumitomo Chemical Company Limited (Sumitomo Chemical) has become the second Japanese manufacturing company to access CLSSettlement as a third-party participant.
Sumitomo Chemical operates businesses in five sectors – petrochemicals & plastics, energy & functional materials, IT-related chemicals, health & crop sciences and pharmaceuticals – and provides products worldwide that support a wide variety of industries. The company is settling its foreign exchange (FX) transactions in CLSSettlement via its third-party service provider, Sumitomo Mitsui Banking Corporation (SMBC). It is also the first CLSSettlement participant using the London Stock Exchange Group (LSEG)’s Refinitiv FXall Settlement 1 Center platform in Japan, which has the ability to generate SWIFT messages (MT304) to SMBC for FX instruction submission to CLSSettlement on Sumitomo Chemical’s behalf.
This significant development highlights the continued growth in CLSSettlement third-party participation in Japan, especially among corporates. Since 2018, the overall number of Asia Pacific third parties participating in CLSSettlement increased by 31% while respective average daily values settled in the service increased by 28%. In that same time period, the average daily values settled in CLSSettlement by third-party corporates in the region also increased by over 200%.
Hisashi Takami, Manager of Finance Department at Sumitomo Chemical, commented, “CLSSettlement enables us to reduce the number of payments and improve operational efficiencies of our FX transactions. Our goal, in line with our mid-term business plan, is to dramatically increase productivity with digital transformation by leveraging the solutions provided by CLS, SMBC and Refinitiv.”
“CLSSettlement enables us to reduce the number of payments and improve operational efficiencies of our FX transactions.”
Jonathan Woodward, Head of Transactions Sales, Asia Pacific at LSEG, commented, “Our FXall Settlement Center allows for automated middle- and back-office trade processing through SWIFT. Sumitomo Chemical’s adoption of the FXall suite of services gives them access to deep liquidity with minimized operational and counterparty risk. Our best practices also ensure compliance with corporate governance and accounting regulations as well as FX guidelines.”
Makoto Miyazaki, General Manager - Japan and Korea at CLS, added: “Large, multinational companies are increasingly looking for effective and sustainable solutions for FX settlement risk management and for streamlining their operations to support growth. This development spotlights the proven benefits of CLSSettlement and the strong demand for CLS’s services from corporates, especially in Japan.”
The Japan FX market has strong participation from export and import companies, and its FX turnover from non-financial market participants, including corporations, is highest in the Asia Pacific region.1 Given the increasing exposure of Japanese organizations to currency markets, adopting global best practices for FX settlement risk mitigation and improving operational efficiency and stability is a key priority.