CLS announced a redesign of its CLSClearedFX service, with LCH ForexClear as the first central counterparty (CCP) to go live. CLSClearedFX is a payment-versus-payment settlement service that allows CCPs and their clearing members to effectively mitigate settlement risk when settling cleared FX and derivative trades.
The redesigned service uses the existing CLSSettlement platform, enabling CCPs to connect and submit bilateral settlement instructions on behalf of their clearing members, integrating their flows into the main CLSSettlement session.
This integration offers CCPs and their clearing members enhanced risk mitigation, significantly improved operational efficiencies, and greater liquidity benefits through a consolidated settlement model. They also benefit from CLSSettlement’s resilient settlement model with robust failure management processes.
LCH ForexClear has successfully transitioned to the redesigned CLSClearedFX service, integrating settlements of cleared deliverable FX contracts into the main CLSSettlement session.
By joining this enhanced service, LCH ForexClear and its clearing members can eliminate the need for separate workflows and bifurcated funding, thereby reducing the costs associated with settling cleared trades.
Tharidu Gamwara, managing director and business manager for Global Currencies and Emerging Markets Trading at J.P. Morgan, said in a statement: “The operational efficiencies derived from both services will be advantageous to our business, offering multiple benefits that come from cleared FX trades being integrated in the main CLSSettlement session through CLSClearedFX.”
Matthew May, global head of Market Structure and Non-Financial Risk for FX, EM Rates and Commodities at HSBC, said in a statement: “Mitigating risk in the FX market is a major area of focus for our business. As the largest financial market in the world, robust risk mitigation and capital optimization in our FX procedures are vital. With LCH ForexClear joining CLSClearedFX, the benefits of the two services together will be bringing additional efficiency to us and the wider market.”
Andrew Cooper, chief services officer at CLS, said in a statement: “Our redesigned service offering reflects the broader trend of financial institutions focusing on best practice in mitigating FX settlement risk and increasing efficiencies associated with centrally cleared trades. The new service demonstrates benefits we can offer to the wider FX marketplace by leveraging our unique position as a financial market infrastructure and collaborating with established service providers that share the same client base.”
Andrew Batchelor, head of ForexClear at LCH, said in a statement: “LCH ForexClear was developed in response to customer demand for solutions that mitigate counterparty credit risk and provide improved financial resource efficiencies. ForexClear and CLS operating under the new redesigned service, will be instrumental in continuing to provide more efficient risk management in the global FX market. The synergy and robust affinities from joining the main CLSSettlement session via CLSClearedFX will enable us to better serve our clients.”