After the dust settles
The collapse of Lehman Brothers and other banks last year proved that settlement risk in the forex market has been greatly reduced. But while forex operational risk managers may be giving themselves a pat on the back, there are warnings that settlement risk needs to be cut back further
Last year was the biggest test yet for the foreign exchange settlement system known as CLS Bank, an industry-wide private initiative launched in 2002 that works to remove settlement risk in forex deals.
Since it launched, CLS Bank has seen a steady rise in the number of trades it handles, and today settles the majority of interbank foreign exchange deals. This proved a major boon when Lehman
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