1 / 21

CLS Group Meeting

CLS Group Meeting. Sarah Medlar Relationship Manager CLS Services Istanbul 3 October 2003. Agenda. CLS – structure CLS – how it works CLS – how it’s working CLS - next steps. Structure. CLS Group Holdings - parent company NY: CLS Bank International

dorothychambers
Download Presentation

CLS Group Meeting

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. CLS GroupMeeting Sarah Medlar Relationship Manager CLS Services Istanbul 3 October 2003

  2. Agenda • CLS – structure • CLS – how it works • CLS – how it’s working • CLS - next steps

  3. Structure • CLS Group Holdings - parent company • NY: CLS Bank International Edge Act Bank - Lead Regulator the Federal Reserve Bank of New York • London: CLS Services Ltd. Facilities Management/ Operations • Tokyo: Representative office

  4. EUR funds EUR agent Bank 1 EUR agent Bank 2 FX-Deal USD EUR MT 202 Bank 1 Bank 2 MT300 MT 202 USD agent Bank 2 USD agent Bank 1 USD funds Payment/information flow pre CLS The Problem

  5. How the world worked before CLS 2 days PLUS

  6. Solving the Problem • 1995 Allsopp report • Banks should review their internal control processes • Industry groups should take collective action • Central Bank measures to encourage risk reduction • led to industry initiative • 1996 - Produced the CLS concept - Preferred Solution • July 1997 New company CLS Services Ltd. • Today 67 shareholders • 2 September 2002 “GO LIVE”

  7. North America Europe Europe Asia/Pacific Overlapping RTGS systems

  8. Monetary Authority of Singapore Danmarks Nationalbank Norges Bank Sveriges Riksbank Reserve Bank of Australia European Central Bank Bank of Canada Bank of England Bank of Japan US Federal Reserve Swiss National Bank CLS Bank is a Multicurrency Bank Holds a multi currency account for each Settlement Member CLS Bank holds RTGS settlement accounts with Central Banks

  9. Funding & settlement Funding completion Submitting Instructions 06:30 How CLS Works 07:00 09:00 12:00

  10. Instructions submitted Instructions submitted

  11. Settlement • Commences at 07.00 CET and is scheduled to complete at 09.00 CET. • Risk Management Tests applied to both Settlement Members. • Real-time exchange of currencies i.e. CLS Bank will not settle the trade unless both parties have the required funds available. • Exchange is effected with finality & irrevocability for Settlement Members over their accounts with CLS Bank • Haircut (volatility margin) applied to Settlement Member’s currency balances to minimise credit risk for CLS Bank.

  12. Risk Management Tests • CLS Bank applies three tests to each Settlement Member’s account before settling individual instructions or paying out funds • Will both Settlement Members still be within the currency Short Position Limit? • Will both Settlement Members still be within their Aggregate Short Position Limit? • Will either Settlement Member’s account become negative after settlement? • No instructions will settle if any of the six tests fail.

  13. CLS Central Bank Accounts Funding

  14. Pay-In Schedule • Multilateral net amount of Settlement Member’s obligations on a given value date. • Short position currencies to be paid in over a period of 5 hours (3 hours for Asia Pacific currencies) commencing at 07.00 CET. • Long position currencies to be paid out by CLS Bank. • Includes all matched Instructions submitted by the Settlement Member and any User Members & Customers (3rd Parties) that the Settlement Member is sponsoring.

  15. Short position limit € 0.5 Billion Total paid in Pay-in € 1.0 Billion € 166 m € 1000 m € 834 m € 167m € 167m € 667 m € 250 m € 500 m € 250 m € 250 m CET 08:00 - 09:00 - 10:00 - 11:00 - 12:00 Responding to the Pay-in Schedule

  16. Pay-outs • Algorithm seeks to make recycle liquidity throughout the process within risk parameters • CLS Bank checks that a Settlement Member is entitled to receive funds, and that funds are available in the Central Bank account before paying out • If Member has unsettled instruction, its pay-out will be adjusted to retain sufficient value to settle irrespective of large intra-day FX move. • No amount will be paid-out that will cause the settlement member’s account to have an overall negative balance.

  17. C Funding and Pay-out 12:00 CET 12:00 CET

  18. CLS Settlement Member B CLS Settlement Member A Payment & information flow under CLS FX-Deal USD EUR MT 300 input input Input Input information Information USD a/c USD a/c Bank 1 Bank 2 EUR a/c EUR a/c CLS Bank CLS Bank

  19. CLS Features – a summary • Linked to CB (RTGS) • Finality in PVP settlement • Multilateral Netted Funding • Real Time settlement and funds flow information • Intra-day Capability • Universal: Global Shareholders/Customers • Independent (Utility) • Not a Central Counterparty • Provides Crisis Management Support

  20. Other CLS shareholder benefits CLS Bank membership Gateway to the provision of third party services

  21. Questions? www.cls-group.com

More Related