CLS Group, the largest operator of foreign exchange cash settlement systems, reported September average daily value of matched instructions submitted by its members totaling $5.05 trillion, up 12.5% from August 2013.Year over Year (YoY) was 2.6% lower, down $140 billion from $5.19 trillion in the same period last year.
While this indicates that total average daily volume (ADV) was higher Month-over-Month (MoM) by at least $506 billion, the ADV of instructions received was down slightly by 1.4% to 1,078,430 in September, or 15,135 lower from 1,093,565 instructions in August. September 2013 was also lower by 3.2% YoY comparing the average daily volume of instructions.
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The MoM growth reflects an increase in the settlement service input totals whereas the aggregation input total was lower since the previous month as can be seen in figure 1 below. The monthly data follows on previous news of CLS reducing settlement risk on the USD/CAD pair.
CLS’s Members consist of nearly 65 of the largest banks globally and volumes are indicative of relationship transactions through member firms, in comparison to ECN or other indirect price aggregators and matching engines. CLS reports both sides of an FX transaction. Therefore, to use the same reporting convention as the Bank for International Settlements (BIS) and the semi-annual foreign exchange committee market reports, the gross value should be divided by two.
Forex Magnates covered in greater detail an overview of the settlement process in a previous article in May. CLS service covers a total of 17 currencies and the group maintains banks account directly with the central banks of each respective nation in order to facilitate the settlement of each currency accordingly.