Two More Banks Joins CLSNet
Posted by Colin Lambert. Last updated: October 31, 2022
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 a community of global and regional banks, which includes seven of the top 10 global banks, according to CLS.
CLSNet has seen a marked increase in adoption this year, CLS says, citing a 179% year-on-year increase in the average daily notional of net calculations in H1 2022. The group does not provide a number for notional values, however it did recently announce it had broken the $100 billion barrier for the first time.
Recently, Deutsche Bank, Mashreq and Standard Chartered all committed to using the platform and the group says as the community continues to grow, users of the service will increasingly benefit from the expanding roster of netting counterparties.
In going live on CLSNet, FAB and UBS will access a centralised platform with matching and legal confirmation of over 120 currencies for FX products, including same-day trades and NDFs.
“The escalating interest in CLSNet is a testament to its centralised model,” says Lisa Danino-Lewis, chief growth officer, CLS. “Through the expanding global network, market participants will be able to maximise the intraday liquidity, operational efficiency and risk mitigation benefits of the service.”
Anan Samaneh, head of FXMM and control operations at FAB, adds, “CLSNet offers standardisation and automation through a centralised 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.”
The greater use of payment-versus-payment in FX markets has been a common theme from authorities since the Bank for International Settlements highlighted non-CLS currency volumes in its 2019 Triennial Survey of FX Turnover. The process is also seen as building operational resiliency.
“CLSNet will enable us to address our wider post-trade processing needs and automate our bilateral netting activity with fellow participants,” says Steve Forrest, global head FX operations at UBS. “Further, as a centralised infrastructure, it not only delivers risk mitigation for participants but also facilitates front office benefits such as liquidity optimisation and reduced funding requirements.”