UBS takes 20% of active third-party CLS business with Saxo deal

The Saxo deal means UBS is now live with 20 third-party institutions and has signed at least another 10 parties to use its access to CLS, a foreign exchange settlement system. CLS, launched in September 2002, was designed to reduce the costs and settlement risks in foreign exchange trade settlements by settling cross-border trades in one place. Previously, such trades were settled in both countries - often at different times, depending on time-zone differences. CLS surpassed daily transaction volumes of more than $1 trillion in February 2003.

CLS member banks hold an account with New York-based CLS Bank for every currency traded. CLS Bank then settles the trades on a net-funded basis over a five-hour period when the opening times of the country-specific real-time global settlement systems overlap. Alternatively they are placed in a queue and monitored until they are settled.

“This program offers banks and financial institutions a wide range of modular services enabling them to concentrate on their core competencies and deploy their resources more effectively,” UBS said in a statement.

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Stemming the tide of rising FX settlement risk

As the trading of emerging markets currencies gathers pace and broader uncertainty sweeps across financial markets, CLS is exploring alternative services designed to mitigate settlement risk for the FX market

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