Continuous Linked Settlement (CLS), is an initiative by a consortium of the world’s largest foreign exchange clearing banks to address the risk of loss of principal associated with the settlement of foreign exchange trades often known as foreign exchange settlement risk. It addresses the long-standing risk of serious payment and liquidity problems resulting from failed foreign exchange settlements, particularly the risk of one side paying in one currency but failing to receive the counter payment in the other currency on a foreign exchange trade.
The key features of CLS Bank are:
CLS provides uniquely secure protection for cross currency settlement-payment versus payment. Under CLS, transactions are settled on a gross basis, whereas funding is on a netted basis. CLS Bank’s unique process delivers settlement finality using Central Bank funds to simultaneously settle transactions in real time. The CLS process has a solid legal and regulatory framework. Settlement is final the moment instructions cross CLS Bank’s books. Settlement is delivered by robust, resilient and secure technology systems and procedures Settlement is only available through CLS Bank and its settlements members. CLS Bank does not guarantee settlement.
The various participants involved in the CLS settlement process are: CLS Bank- CLS Bank is a multi-currency bank holding multi-currency accounts for each settlement bank and an account with each of the eighteen Central Banks. Settlement Member -Settlement Member is a share holder of CLS Bank and also has a multicurrency account with CLS Bank. They may submit instructions directly for settlement and receive information on the status of instructions submitted by them directly from CLS bank Third Party- Third party is a foreign exchange market participant that settles its transactions in CLS Bank but has no direct relationship with CLS Bank. All transactions are submitted to CLS via a Settlement or a User member. CCIL participates as a third party member and acts as an aggregator of trades for its member banks CCIL does not have any direct relationship with the CLS bank Correspondent Banks/Nostro Bank Liquidity Provider
When a CLS eligible foreign exchange deal is struck between Settlement Members of CLS/or third parties, each counterparty transmits the details of the deals to CLS Bank via a Settlement Member, where they are matched and held until the settlement date. At the start of day, each Settlement Member’s net position in each currency for that day is calculated. For short currency positions a payment schedule is devised by CLS, and, by given times during the CLS day (within the settlement window ie 7:00 to 12:00 CET), the Settlement Member makes the payments to CLS Bank and correspondingly receives payments for its long positions
CLS Bank offers settlement in the following 18 currencies: a)EUR (Euro) b)GBP (Great Britain Pound). c)CHF (Swiss Franc) d)CAD (Canadian Dollar) e)YEN (Japanese Yen) f)AUD (Australian Dollar) g)DKK (Danish Krone) h)NOK (Norwegian Krone). i)SEK (Swedish Krona) j)SGD (Singapore Dollar) k)USD (US Dollar) l)HKD (Hong Kong Dollar) m)KRW (Korean Won) n)ZAR (South African Rand) o)NZD (New Zealand Dollar) p)ILS (Israeli Shekel) q)MXN (Mexican Peso). r) HUF (Hungarian Forint)
CLS Bank undertakes the settlement of foreign exchange Tom, Spot and forward transactions. Cash deals are currently not taken up for settlement.
Yes, except on Saturdays, Sundays, 25th December and 1st January.
The main essence of the CCIL product offering is to aggregate trades reported by all Member Banks. The higher volumes enable CCIL to drive for better pricing and improved liquidity management, enabling banks to collectively enjoy the benefits of cross currency settlement through CLS Bank. The other key features of the CCIL-CLS product offering are:
a)Minimum System changes b)Trade Input using various options. c)Local Client Support. d)Benefit of Early payout. e)Collateral in the local currency.
No, CCIL merely acts as an aggregator and facilitates settlement by availing services of a Settlement Member.
CCIL’s Settlement Member is UBS Switzerland AG.
Following entities are eligible to participate in CCIL-CLS settlement, by availing a separate membership for the segment:
· Members of the USD-INR segment · Banks set up in IFSC - Gift City · Overseas Branches of Indian Banks
No, there are no separate membership application fees for the CCIL-CLS settlement process.
CCIL has no contractual relationship with CLS Bank. CCIL avails the risk mitigation benefits offered by CLS Bank through a CLS Settlement Member namely UBS Switzerland AG.
Yes, provided the counterparty is eligible to settle through CLS Bank either as a direct participant or by availing the services of a Settlement Member. A member bank submits the deal confirmation to CCIL and the counterparty submits the deal confirmation to its Settlement Member. The deals are matched at CLS Bank.
CCIL undertakes settlement in the 14 major currencies. The Korean Won (KRW), the Israeli Shekel (ILS), the Mexican Peso (MXN) and the Hungarian Forint (HUF) are currently not traded by Indian banks in a major way and hence not taken up for settlement.
CLS Best practice suggest that the deals need to be reported within 2 hours of the deals getting struck. Member banks are permitted to report deals till the stipulated cut-off time.
CLS Best practice suggests that once a deal is matched at CLS Bank, counterparty confirmations can be done away with. Please refer to the CLS Bank website for more information on the subject.
The member bank is provided with an internet based application UBS Key Link which provides real time information about trades and positions. The Online information on payment status and positions is available to member banks on the IRIS platform.
Members are required to report trade data to CCIL in the format stipulated within the cutoff time as notified by CCIL. CCIL then performs various basic technical and business level validation checks for these deals. Deals that pass the validations are subjected to an exposure check. Deals that pass the exposure checks are forwarded to CLS Bank for matching. Members are advised of their Net Positions through UBS Key Link system, supplemented with Reports on the CCIL Report browser and IRIS Platform.
Operational FAQs
Please mail on sh-keylink-apac@ubs.com and sh-keylink@ubs.com giving details of user id and contact number (please mark cc to cls@ccilindia.co.in)
Please mail on sh-keylink-apac@ubs.com and sh-keylink@ubs.com giving details of user id and contact number (please mark cc to cls@ccilindia.co.in)
Please mail on sh-keylink-apac@ubs.com and sh-keylink@ubs.com giving details of user id and contact number (please mark cc to cls@ccilindia.co.in)
Kindly check the trade with Counter-party trade details lying in alleged viz. currency mismatch, amount mismatch, value date mismatch.
Please be note all deals reported after trade reporting cut off of 8.30 pm IST (S-1) will flow to UBS/CLS next business day after 8.00AM IST. Check on next day for the status of the deal in Keylink system.
Please mail us on cls@ccilindia.co.in or call on 61546452-6
Kindly update the excel file attached for the deals to be reported with all the required details and mail on cls@ccilindia.co.in before trade reporting cut-off of 8.30 P.M. IST. Alternately you may download the IFN 300 generator from report browser for deal generation from CCIL IT utility. Kindly contact on 022-61546234/6250/51 (IT team) for further assistance.
Members may check in IRIS>Home>CLS Dashboard. For pending payments member may please follow-up with their nostro and ensure funds before cut-off time.
You can check in IRIS>Home>CLS Dashboard to get the information
Please mail us on cls@ccilindia.co.in and ithelpdesk@ccilindia.co.in stating the error message shown and User ID.