Articles tagged by settlement
CLS Group has
announced that Wells Fargo has joined as a settlement member.
Wells Fargo joins 64 other settlement member
banks in becoming a direct participant in CLS’s settlement and risk mitigation
system – which settles approximately $5 trillion a day on ...
The average daily
input value submitted to CLS was $5.19 trillion in June, up 12.6% from the
previous month and up 3% year-on-year.
Average daily input
volume submitted to CLS, combining the settlement and aggregation services, was
1.16 million in June.
This represents a
Daiwa Securities Group has joined CLS as its newest settlement member.
Daiwa Securities, one of the largest financial institutions in Japan, joins 65 other financial institutions in becoming a direct participant in CLS’s settlement and risk mitigation system – which settles ...
The average daily input volume of instructions submitted to CLS,
combining the settlement and aggregation services, fell 9.7% month on month in
July, standing at 1,050,046.
However, year on year volumes were less changed,
decreasing by just over 1.7%.
Meanwhile, the average daily ...
CLS Group is planning to release a payment netting service, CLS Netting, for buy and sell-side institutions’ FX trades that are settled outside of its settlement service.
Firms will have the choice of connecting to the service via existing channels or by utilising Distributed Ledger Technology (DLT).
CLS claims that the global FX market is limited by the lack of a standardised payment netting process for trades not settled within CLS. The firm claims that in many cases institutions are forced to intervene manually to complete the process, leading to inconsistent and bespoke approaches to netting throughout the market, which in turn results in higher costs and increased intra-day liquidity demands.
CME Group has changed its rules regarding FX delivery, putting a cap on the amount of deliverable FX that firms can clear via wire transfer when trading deliverable currency products on its platforms.
Currently, under CME Rule 730 deliverable currency futures contracts are required to be physically delivered through CLS where both the trading unit and price increment currency are supported by CLS delivery procedures, unless the clearing firm’s delivery exposure in any single contract is not expected to exceed $25 million.
Noble Bank International recently launched with a new business model aimed at alleviating the current credit constraints in the FX market. Will it be a “game changer” for the industry? Galen Stops takes a look.
If every new product or service launch that claimed to be “game changing” actually was, the FX industry would be a dizzying place to work in, such is the popularity of this phrase and its variant forms.
As a result, it was hardly surprising to see Noble Bank International (Noble) hail its new real-time, post-trade FX service as “industry changing”, when its official launch was announced last month. And yet, if the Noble model manages to gain significant traction within the FX industry, it could have a significant impact on how the market operates.
Celent has released a report today that documents the progress being made in the internationalisation of the renminbi (RMB), and outlines the opportunities that this represents for market participants, as well as the challenges it presents.
Discussing how investment managers can benefit from RMB internationalisation, the report says that they should consider adopting new strategies to respond to greater short-term volatility in the currency.
It notes that investment managers have traditionally looked to gain from China’s one-way currency appreciation and hold bonds till maturity.
“But Chinese regulators’ abandonment of circuit breakers and other protective measures means traditional expectations of regulatory intervention may not hold going forward, opening up more opportunities for short-term price fluctuations,” says the report.
NEX Optimisation (Nex) has launched a fully automated settlement netting service to streamline the bilateral settlement netting process for market participants.
The service will automate settlement netting of over-the-counter FX trades and will expand to all asset classes in the future.
Settlement failure rates are estimated at approximately 3% for the $1.5 billion that is settled on a daily basis between clients and their dealers. The new service will eliminate the manual process of netting between clients and their dealers by applying an API to communicate with the systems and reconcile payments for clients, banks and custodians.
Five banks have filed to settle a class action lawsuit brought against them over FX benchmark manipulation claims.
According to papers filed in New York, the settlement agreements resulted from “arm’s-length negotiations between highly experienced counsel and fall within the range of possible approval”.
Morgan Stanley has agreed to pay $50 million; Societe Generale $18 million; Standard Chartered Bank $17.2 million; Royal Bank of Canada $15.5 million; and Bank of Tokyo-Mitsubishi UFJ $10.2 million. All five banks continue to deny wrongdoing.
Profit & Loss talks to John Betts, CEO of Noble Bank International, about the demand for more innovation in FX and the potential impact of a shift towards real-time settlement.
John Betts: The fact that people are not just receptive to innovation but starting to demand it is a really good sign for the industry. I think previously everyone was too focused on the front office, but now there’s a recognition that the back office needs innovation too.
One challenge that I feel still exists, however, is that the back office is not something that’s very well understood, so when solutions are being proposed to back office problems it can be difficult for firms to distinguish between solutions that actually address these problems and ones that are shiny new objects that allow firms to tick an “innovation” box.
CLS Group plans to launch a same-day settlement service in the second half of 2018, subject to regulatory approvals.
The new service, CLSNow, will offer bilateral, same-day, payment-versus-payment gross settlement in CAD, CHF, EUR, GBP and USD, with plans to extend the service to additional currencies in the future, based on client demand. The aim is to enable counterparties to optimise the use of available liquidity in the same-day market, while mitigating settlement risk.
Currently, some of CLS’s largest clients have in excess of 10% of their daily euro business being transacted on a same-day basis, and the expectation is that the launch of CLSNow will further facilitate the growth of this same-day market.
OTC Exchange Network (OTCXN), which uses proprietary blockchain technology in a bid to eliminate trading counterparty and settlement risk on their trading network, has acquired Ogg Trading, a provider of FX trading technology.
Through this deal, which closed on June 18, 2018, OTCXN will acquire all Ogg Trading’s technology including the dark pool that it previously ran in partnership with Bloomberg. The dark pool is a complete matching engine technology stack. The plan is to add market data publishing to this platform in order to create a regular central limit order book (CLOB) with a lit pool of liquidity. Ogg Trading also has a liquidity aggregator and smart order router (SOR) system that can be deployed to run a quote driven market place.
CLS has announced today that the first Japanese-domiciled funds have access to CLSSettlement as third-party clients.
Asset manager Fidelity International and The Master Trust Bank of Japan (MTBJ), a trust bank exclusively engaged in asset management, have the first Japanese-domiciled funds to settle FX transactions in CLSSettlement. CLS says that this marks the start of a coordinated industry-wide effort to onboard the Japanese buy-side community to its settlement service over the next few years.
Fidelity International and MTBJ are being supported by Brown Brothers Harriman (BBH), which acts as MTBJ's custodian for non-Japanese securities and related currency movements outside of Japan. BBH has made its third-party access to CLSSettlement available to facilitate MTBJ's settlement of FX transactions.
The Bank of England says it is looking to explore synchronisation of payments in its RTGS (Real Time Gross Settlement) service, including cross border payments relating to international currency transactions.
In a release the Bank says it believes that this functionality could provide an opportunity to reduce cost and risk, improve efficiency, and support innovative new methods of settlement. “We are now seeking to work with a small group of organisations to further explore the potential for this functionality,” it states.
FX industry veteran and Profit & Loss 2012 Hall of Fame inductee, David Ogg, reflected in a recent video interview on how the rapidly evolving crypto markets resemble the FX markets of the past.
“It’s like FX in the 1980s,” said Ogg, who is currently the head of FX and trading venues at OTCXN, before adding, “The front-end technology is pretty primitive.”
By contrast, he said that OTCXN has developed “cutting edge” technology in terms of how it displays liquidity, offering visual tickers that enable traders to get a visual representation of what is happening in the market with just a glance.
Galen Stops takes a closer look at the distributed ledger technology solution that HSBC has deployed for settling FX transactions.One of the long-standing accusations levelled against distributed ledger technology (DLT) within financial services is that it is a solution looking for a problem, an accusation that appears to have gained some weight over the past few years given the vast disparity between the initial level of hype around this technology and the actual implemented use cases for it.Which is why it is significant that HSBC recently announced that it has settled more than three million FX transactions and made more than 150,000 payments worth $250 billion using DLT. If this announcement caught FX market participants by surprise, this is probably because this DLT solution, called HSBC FX Everywhere, has thus far only been used to orchestrate payments across HSBC’s internal balance sheets.
FastMatch and Dmitri Galinov, the founder and former CEO of the company, have resolved the lawsuit filed by Galinov against FastMatch and its parent company, Euronext US.Under the terms of the settlement, neither party admits any liability or wrongdoing.“The settlement is in the best interests of the company, its employees and clients,” says a release announcing the agreement.Galinov left the company on 6 June, 2018 and is “pursuing other interests”, according to the release.Profit & Loss was unable to immediately contact a spokesperson for Euronext, while a spokesperson for Galinov says that as part of the settlement agreement both parties are unable to comment on the terms of the agreement.