CLS, a financial market infrastructure group delivering settlement, processing and data solutions, has today announced that its long-standing settlement member, ANZ Banking Group Limited, has onboarded the Hungarian Forint, making it the first Asia Pacific bank to settle all 18 eligible currencies on CLS’s payment-versus-payment (PvP) system, CLSSettlement.
Introduced in 2002, CLSSettlement mitigates the largest risk in FX – settlement risk. ANZ was among the first Australian banks to go live on the service and one of the six inaugural Asia Pacific banks to settle FX transactions on the system.
Research from the Bank for International Settlements Quarterly Review (December 2019) determined that a significant part of FX trades in CLS-eligible currencies are being settled without any PvP protection, putting a large proportion of market participants at risk. ANZ bringing onboard all 18 CLS currencies on CLSSettlement sets a strong precedent to other banks in the region to continually explore ways to mitigate FX settlement risk, which is becoming an increasing focus for regulators and industry bodies.
Margaret Law, Head of Client Management, APAC at CLS, commented:
With the growth of FX trading particularly in Asian currencies, settlement risk has become an increasing concern for banks in the region, and it is essential that they consider executing appropriate FX settlement risk mitigation measures. We anticipate that other banks in Asia Pacific will follow ANZ’s lead and reduce their principal risk as much as possible by settling FX transactions through financial market infrastructures, like CLS, that provide PvP arrangements.
Joachim Mies, Markets Chief Operating Officer at ANZ Banking Group Limited, added:
Extending our CLSSettlement capabilities across all CLS-eligible currencies provides a unique offering for customers in the region who require the mitigation of FX settlement risk. We believe this is a key differentiator for ANZ, and for our customers – particularly in the funds management space.
Yesterday, CLS released its operating metrics for November 2020 with average daily traded volume submitted to CLS of USD 1.787 trillion.
Earlier in December BGC Brokers LP’s division Capitalab signed a services agreement with CLS Group, benefiting from FX forwards and swaps data directly from CLS in all CLSSettlement-eligible currencies, enhancing the speed and efficiency of FX portfolio optimisation.
