CLS celebrates 10 year anniversary

Posted: 10 September 2012 | CLS | No comments yet

Launched in September 2002, CLS has settled 1.1 trillion FX payment instructions for 17 currencies …

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CLS Group (CLS), the market infrastructure that enhances financial stability by providing risk mitigation services to the global FX market, today celebrates its 10-year anniversary.

Launched on September 9, 2002, CLS was established by the FX industry to mitigate settlement risk for the FX transactions of its Settlement Members and their customers. CLS originally went live by settling payment instructions in seven currencies; it now processes instructions for 17 currencies.

Since 2002, CLS has become fundamental to the FX market, increasing from 39 members to 63 of the world’s leading financial institutions, and significantly expanding its community to include over 16,000 third party participants.

CLS has played a major role in the evolution of the FX market over the past decade as volumes and values have grown exponentially. In its first month of operation, CLS settled an average daily volume of 5,700 payment instructions with an average daily value of US$53 billion. Today, CLS is settling nearly 1 million payment instructions each day with an average daily volume of US$4.5 trillion.

Since September 9, 2002 CLS has achieved a 100% success rate in settling the 1.1 trillion FX payment instructions it received.

CLS has also worked closely with the FX industry to adapt and extend its products and settlement services to respond to changing market requirements. It became the global cash settlement partner for DTCC in 2007, and developed the trade compression service, CLS Aggregation Services, with Traiana in 2010.

Perhaps the most notable achievement in CLS’ 10-year history was its robust performance during the 2008 global financial crisis. As conditions deteriorated in the global capital markets, CLS settled a record amount of transactions, successfully and on time, helping the FX market to function efficiently.

“Since its inception, CLS has been central to the FX industry’s significant growth, as this market evolved into a distinct and liquid asset class,” said Gerard Hartsink, CLS’ Chairman. “CLS’ infrastructure has proven to be robust and able to pass the sternest of tests — as we clearly saw during the height of the 2008 financial crisis.”

CLS’ fundamental role in providing stability to the financial markets was further underlined on July 18, 2012, when it was designated a systemically important financial market utility by the US Financial Stability Oversight Council, created by the Dodd-Frank Wall Street Reform and Consumer Protection Act.

With the pace of regulatory and industry change in the FX market rapidly accelerating, CLS’ Board last month appointed a new Chief Executive Officer: David Puth, whose career spans more than three decades in financial markets, including 19 years at J.P. Morgan where he served in a variety of senior global leadership roles.

“Over the past decade CLS has successfully mitigated FX settlement risk, while delivering operational, liquidity, and credit efficiencies, assuming a prominent role in the expansion of the FX market,” Mr. Puth said. “Moving forward, as we deliver new currencies and new services, I am convinced that CLS will strengthen its position as the global standard for risk mitigation in the FX market.”

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