First Abu Dhabi Bank and UBS go-live on CLSNet
First Abu Dhabi Bank (FAB) and UBS have gone live on CLS’s bilateral payment netting calculation service for over 120 currencies – CLSNet. They will join the growing CLSNet community of global and regional banks, which includes seven of the top ten global banks.
CLSNet has seen a marked increase in adoption this year, with a 179% year-on-year increase in the average daily notional of net calculations in H1 2022. This announcement follows the news that Deutsche Bank, Mashreq and Standard Chartered have committed to using the platform. As the CLSNet community continues to grow, users of the service will increasingly benefit from the expanding roster of netting counterparties.
CLSNet standardizes and centralizes post-trade processes across the global currency spectrum – and in doing so reduces risk, enhances efficiency and improves liquidity for a growing network of FX market participants.
In going live on CLSNet, FAB and UBS will benefit from a centralized platform with matching and legal confirmation of over 120 currencies for FX products, including same-day trades and NDFs.
Lisa Danino-Lewis, Chief Growth Officer, CLS, commented, “We are delighted that FAB and UBS have gone live on CLSNet. The escalating interest in CLSNet is a testament to its centralized model. Through the expanding global network, market participants will be able to maximize the intraday liquidity, operational efficiency and risk mitigation benefits of the service.”
Anan Samaneh, SVP & Head of FXMM & Control Operations, FAB, said, “CLSNet offers standardization and automation through a centralized platform which will significantly enhance our post-trade process – thereby enhancing operational efficiency, risk mitigation and reduced funding requirements. Participating in CLSNet also supports FAB’s adherence to the best practice settlement risk principles of the FX Global Code.”
“Participating in CLSNet also supports FAB’s adherence to the best practice settlement risk principles of the FX Global Code.”
SVP & Head of FXMM & Control Operations
First Abu Dhabi Bank
Steve Forrest, Global Head FX Operations, UBS, added, “CLSNet will enable us to address our wider post-trade processing needs and automate our bilateral netting activity with fellow participants. Further, as a centralized infrastructure, it not only delivers risk mitigation for participants but also facilitates front office benefits such as liquidity optimization and reduced funding requirements.”
Using CLSNet also reinforces FX market participants’ adherence to the FX Global Code, the industry’s global principles of good practice for the FX market. In particular, using the service supports adherence to Principles 35 and 50,1 as all trade instructions sent to CLSNet are automatically validated and matched up to the pre-determined cut-off times between counterparties for each currency.
“CLSNet will enable us to address our wider post-trade processing needs and automate our bilateral netting activity with fellow participants.”
Global Head FX Operations
This ensures that only matched trade instructions are included in the automated net calculation and provides a single common record of the net payment obligations. By automating the netting calculation process via a centralized platform, users benefit from greater operational efficiency through substantially enhanced straight-through processing rates as well as increased risk mitigation for currency flows not settling via CLSSettlement.
1. 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.