Lack of commonality in rogue traders adds to the risk banks face from within
The dollar dominance dispute
"Allowing CCPs to settle FX trades bilaterally would reintroduce Herstatt risk, so it would certainly be preferable to have CCPs become either direct or third-party members of CLS," says LCH.Clearnet executive
CLS Bank, the multi-currency cash settlement system provider, is aiming to settle same-day US dollar/Canadian dollar and US dollar/Mexican peso currency trades by the end of 2010, according to chief executive Rob Close.
Continuous-linked settlement – the initiative designed to eliminate forex settlement risk – went live at the end of last year. But with only Australia and Japan represented in the first batch of currencies, what will CLS mean for Asia’s banks?