MUFG Bank signs up to CLSNet
MUFG Bank is the first Japanese bank to commit to using CLSNet, CLS’s bilateral payment netting calculation service for over 120 currencies. MUFG Bank will join the expanding CLSNet community of global and regional banks, which includes eight of the top ten global banks.
CLSNet has seen a substantial rise in adoption this year, with a 495% year-on-year increase
in the average daily notional of net calculations in Q3 2022. The centralized platform
standardizes and automates post-trade matching and netting processes across the global
currency spectrum. As market participants continue to focus on the risks associated with
post-trade processing and settlement in currencies outside of CLSSettlement, CLSNet offers
standardization and automation through a single platform which mitigates risk, reduces
operational costs and optimizes liquidity for these currency flows.
Lisa Danino-Lewis, Chief Growth Officer, CLS, commented, “We are delighted to
welcome MUFG Bank as the first Japanese participant in CLSNet. As the global network
continues to grow, participants will benefit from the expanding range of netting
counterparties, as well as the improvements to liquidity optimization, operational efficiencies
and risk mitigation benefits of the service.”
Junya Kishida, Head of Global Markets Operations Division, MUFG Bank, said,
“CLSNet provides unparalleled standardization and centralization of post-trade processes
across the global currency spectrum. Our participation in the service will be integral to our
ability to improve operational efficiency and reduce risk for the currencies that are not
currently eligible for CLSSettlement. CLSNet also supports MUFG Bank’s adherence to the
best practice settlement risk principles of the FX Global Code.”
Akira Kato, Head of Client Engagement, Asia Pacific, CLS, added, “The addition of
MUFG Bank to CLSNet reinforces the value the service is delivering to the broader FX
market. With the growth of FX trading, particularly in Asian currencies, it is essential that
market participants adopt effective solutions to manage risk for their post-trade processes.”
Using CLSNet supports market participants’ adherence to principles 35 and 50 of the FX
Global Code.1 All trade instructions sent to the platform are automatically validated and
matched 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 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 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.