Segments

CLS provides a continuous mechanism for the simultaneous settlement of both sides of an FX deal.

CLS operates as a Payment versus Payment (PvP) system. Time zone differences increase the risk of one party defaulting before both sides of the trade are settled. PvP eliminates time zone risk because both sides of a transaction are settled simultaneously. Settlement in CLS is final and irrevocable. Under CLS, transactions are settled on a gross basis, whereas funding is on a netted basis.

The mechanism involves an ongoing process of submitting trade instructions, matching those trades, funding the deals, and then paying out to the participating accounts. At the start of day, each Settlement Member’s net position in each currency for that day is calculated. A payment schedule is devised by CLS for short currency positions and by given pay-in times during the CLS day (within the settlement window i.e. 7:00 to 12:00 CET), the Settlement Member makes the payments to CLS Bank and correspondingly receives payments for its long positions.

CCIL provides CLS Settlement through a CLS Settlement Bank namely UBS Switzerland AG. CCIL, has been using the services of its settlement bank, customized the CLS product for the member. All domestic banks in India and IBU banks set up in IFSC Gift City along with overseas branches of banks in India can avail the CCIL CLS services by way of a separate membership to the segment.

The settlement procedure adopted by CCIL is on similar lines as that of CLS Bank. 
CCIL has standardized the mode for reporting of deals such Deal confirmation files are transmitted by member banks to CCIL which in turn are forwarded to settlement bank for ultimate submission to CLS Bank. Trades are validated, subjected to exposure check and subsequently matched at CLS Bank.  All matched trades are taken up for settlement on value date.

CCIL offers a real time web based tool – UBS Key Link; that enables its members to track online status of deals submitted and currency wise net positions and obligations. Online information of payment status and positions is made available on CCIL IRIS platform. CCIL also offers its members the facility to pay and receive currency obligations within the operating timelines of the respective currencies, subject to availability of limits. CCIL offers banks various options to avail required limits including against available free collateral in the SGF (Securities Segment) account. CCIL’s product has been customized to local requirements and offers members flexibility, efficiency and value.