HSBC Joins the Cross-Currency Swaps Service of CLS and IHS Markit

HSBC, one of the leading banks in the world, has joined the cross-currency Swaps Swaps Swaps can be defined as a derivate contact composed of two parties that exchange to cash flow between two separate financial instruments.They are generally divided into two categories. This includes contingent claims (options) and forward claims, where forward contracts, swaps, and exchange-traded funds (ETFs) are exchanged. Commodity price, equity price, interest rate, and foreign exchange rate are common variables used as one of the cash flows in swaps upon initiation. Different Types of Swaps Swaps can be defined as a derivate contact composed of two parties that exchange to cash flow between two separate financial instruments.They are generally divided into two categories. This includes contingent claims (options) and forward claims, where forward contracts, swaps, and exchange-traded funds (ETFs) are exchanged. Commodity price, equity price, interest rate, and foreign exchange rate are common variables used as one of the cash flows in swaps upon initiation. Different Types of Swaps Read this Term service of CLS, a financial market infrastructure that delivers settlement, processing and data solutions across the global FX ecosystem, and also IHS Markit, a world leader in critical information, Analytics Analytics Analytics may be defined as the detection, analysis, and relay of consequential patterns in data. Analytics also seeks to explain or accurately reflect the relationship between data and effective decision making. In the trading space, analytics are applied in a predictive manner in an attempt to more accurately forecast the price. This predictive model of analytics generally involves the analysis of historical price patterns that are used in an attempt to determine certain price outcomes. Analyt Analytics may be defined as the detection, analysis, and relay of consequential patterns in data. Analytics also seeks to explain or accurately reflect the relationship between data and effective decision making. In the trading space, analytics are applied in a predictive manner in an attempt to more accurately forecast the price. This predictive model of analytics generally involves the analysis of historical price patterns that are used in an attempt to determine certain price outcomes. Analyt Read this Term and solutions.

According to an official announcement, a total of 9 settlement members including some of the leading global banks are now live on the service. CLS highlighted that the mentioned service is an extension of the company’s innovative PvP settlement service and uses the MarkitSERV trade confirmation platform to allow CLSSettlement members to send their cross-currency swaps into CLSSettlement for settlement.

In May 2021, CLS reported a surge in FX demand as the average daily volume jumped significantly. For May 2021, the average daily volume came in at $1.798 trillion, which was 21% higher than the same period in 2020.

Explaining the details about the cross-currency swaps, CLS mentioned: “Increasing cross-currency swap flows to CLSSettlement supports the call from policymakers and regulators to increase payment-versus-payment (PvP) adoption across the industry in order to mitigate settlement risk. There has been a clear trend in FX markets in recent years - the rise in global trading of currencies that do not have payment-versus-payment (PvP) settlement mechanisms.”

“To address this issue, international standard-setting bodies, such as the CPMI and the Global Foreign Exchange Committee, are exploring ways to increase the level of PvP settlement in the FX market,” CLS added.

Participation of HSBC

HSBC became the latest financial firm to join the cross-currency swaps service of CLS and IHS Markit. In May 2021, the financial giant announced the exit from the US retail banking business. “We are delighted to welcome HSBC as the latest participant to join our cross-currency swaps service. As more settlement members join the service, they will benefit from significant operational and funding efficiencies. CLS has long advocated for greater PvP adoption to mitigate FX settlement risk, and by increasing cross-currency swap flows to CLSSettlement, HSBC’s participation will help to achieve that,” Lisa Danino-Lewis, Global Head of Sales at CLS, said.