Japanese bank MUFG Bank commits to using CLS’s bilateral payment netting calculation service for over 120 currencies.
CLS is a market infrastructure group delivering settlement, FX processing and data solutions, while MUFG Bank is joining the community of global and regional banks using its centralised platform CLSNet.
CLSNet automates post-trade matching and netting processes across the global currency spectrum.
Market participants continue to focus on the risks of post-trade processing and settlement in currencies outside of CLSSettlement. CLSNet mitigates risk, reduces operational costs and optimises liquidity for these currency flows.
The platform has seen a substantial rise in adoption this year, with a 495 per cent year-on-year increase in the average daily notional of net calculations in Q3 2022.
“CLSNet participants benefit from the expanding range of netting counterparties. This includes improvements to liquidity optimisation, operational efficiencies and risk mitigation benefits,” explains Lisa Danino-Lewis, CGO at CLS.
Junya Kishida, head of global markets operations division at MUFG Bank, adds, “The service will be integral to operational efficiency. It reduces the risk for currencies not eligible for CLSSettlement.
“CLSNet supports MUFG Bank’s adherence to the best practice settlement risk principles of the FX Global Code.”
FX global code
Using CLSNet supports market participants’ adherence to principles 35 and 50 of the FX Global Code.
Trade instructions sent to the platform are automatically validated and corresponded to the pre-determined counterparty cut-off times for each currency. This way, only matched trade instructions are included in the automated net calculation. A single common record of the net payment obligations is also provided.
By automating the netting calculation process via a centralised platform, users benefit from greater operational efficiency through enhanced processing and increased risk mitigation for currency flows not settling via CLSSettlement.
Akira Kato, head of client engagement, Asia Pacific, CLS, continues, “The addition of MUFG Bank to CLSNet reinforces the value the service is delivering to the broader FX market. With FX trading growth in Asian currencies, it’s essential that market participants manage risk for their post-trade processes.”
