CLS Adds First Chinese Third-Party Bank to CLSSettlement

The addition of CNCBI follows a larger trend of increased awareness of FX settlement risks.

CLS, a provider of risk mitigation and settlement services for foreign exchange (FX) dealers and institutions, announced this Tuesday that China CITIC Bank International Limited (CNCBI) has become the first Chinese bank to access CLSSettlement as a third-party client.

According to CLS, the addition of CNCBI in the Asia Pacific represents a growing trend of increased awareness of the risks associated with FX settlement. Not only that, but industry participants are also establishing stronger controls, improving operational efficiency and mitigating risks, which has led to today’s development.

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This trend has been driven by a 21 percent uptick in the overall number of third parties in the region, coupled with a 36 percent growth in the average daily gross volumes settled by third-party participants in the past three years.

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Commenting on the partnership, Mr Bai Lijun, Executive Director, Alternate Chief Executive Officer and Treasurer at CNCBI, said: “By becoming a participant in CLSSettlement, CNCBI aims to mitigate settlement risk, reduce operational costs related to FX trading, and create opportunities for business expansion by enabling CNCBI to do more business with a larger number of counterparties.”

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Industry initiatives, such as the FX Global Code, have also played a role in increasing awareness on the importance of adopting a best-practice approach for settlement and post-trade processing for market participants.

“Expanding third-party participation in CLSSettlement is a key part of our business growth strategy in Asia Pacific,” added Margaret Law, Head of Client Management, Asia Pacific, CLS.

“CLS was created by the industry for the industry and the addition of CNCBI indicates that third parties are becoming more actively involved in managing settlement risk, as part of a broader movement in the region toward demonstrating best practices and achieving operational and liquidity efficiencies. Overall, this will help to build a more robust global FX market.”

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