CLS announced that MUFG Bank (MUFG) has gone live on CLSNet, its bilateral payment netting calculation service for multiple currencies. MUFG is the latest participant to go live on the service, which includes eight of the top ten global banks.
The average daily netted value in CLSNet has consistently exceeded $140 billion over the last 12 months, and in June 2024 reached $593.2 billion netted, underscoring the growing network effect. As the CLSNet community continues to build, users of the service will increasingly benefit from the expanding roster of counterparties with whom they can fully automate the netting calculation process.
Designed to standardize and centralize post-trade processes for over 120 currencies across various FX trade types, including same-day trades and NDFs, CLSNet helps market participants to reduce risk and achieve greater operational efficiency for a broad range of currency flows. While settlement risk in the FX market continues to be an area of focus – especially in emerging market currencies and other growing segments of the market – market participants are looking for other ways to mitigate risk effectively.
Lisa Danino-Lewis, chief growth officer at CLS, said in a statement: “As our network expands, more and more participants around the world will experience significant improvements in operational efficiencies and risk mitigation.”
Junya Kishida, head of Global Markets Operations Division at MUFG Bank, said in a statement: “Joining the service will improve our operational efficiency and reduce risk for the currencies that are not currently eligible for CLSSettlement, while supporting our adherence to the best practice settlement risk principles of the FX Global Code.”
All trade instructions sent to CLSNet are validated and matched up to the pre-determined cut-off times between counterparties for each currency. This ensures that only matched trade instructions are included in the automated net calculation and that there is a single common record of the net payment obligations.
By automating the netting calculation process via a centralized platform, users benefit from greater operational efficiency and increased risk mitigation for currencies that are not currently eligible for CLSSettlement.