Standard
Chartered has started using CLSNet, joining the top dozen global banks on the
foreign exchange (FX) payment netting platform as Asian financial institutions
increasingly look to cut settlement risk in emerging market currencies.
StanChart Joins CLSNet as
Asian Banks Expand Risk Management
The
cross-border bank went live on the service alongside CTBC, the Hong Kong branch
of a Taiwanese lender. Two other Asian banks – Malaysia’s Maybank and Taiwan’s
Taishin – have signed up to join the network, according to CLS, the financial
market infrastructure company that operates the platform.
CLSNet automates the
calculation of bilateral payment netting across more than 120 currencies,
including emerging market currencies and same-day trades that don’t go through
CLS’s main settlement system. The service averaged $169 billion in daily netted
value during the first half of 2025, an 18% jump from the same period last year.
“We
are seeing increased demand for proven solutions to address the challenges
facing the FX market,” said Lisa Danino-Lewis, chief growth officer at
CLS. “As more participants join CLSNet, the resulting network effect will
deliver even greater risk reduction and efficiency benefits for all users”.
The move
comes at a time when the global FX trading volumes jumped almost 30% to $9.6
trillion daily, mainly due to the soar in derivatives’’ activity, finds
the newest survey conducted by the Bank of International Settlements.
Settlement Risk Drives
Asian Adoption
The uptick
in Asian bank participation comes as settlement risk in foreign exchange
transactions remains a concern, particularly for emerging market and developing
economy currencies. Market participants are under pressure to follow best
practices outlined in Principle 35 of the FX
Global Code, which encourages automated netting systems where
payment-versus-payment settlement isn’t available .
The new
Asian members are focused on reducing exposure in currency pairs like USD/CNH,
according to CLS. Tony Hall, global head of markets trading and XVA at Standard
Chartered, said the move fits with the bank’s push to strengthen its position
in emerging markets FX.
“By
leveraging CLSNet capabilities, we’ll deliver safer, faster and more efficient
post-trade processing, freeing up intraday liquidity and reducing settlement
risk for our clients,” Hall said.
Broadening Membership Base
CLSNet’s
community has expanded beyond the largest global banks to include regional
lenders, funds, corporates and non-bank financial institutions. Last year, BNY
Mellon and ING joined the platform, which had seen its daily netted
notional value consistently exceed $115 billion over a 12-month period .
CLS has also
been adding leadership with market infrastructure experience as it grows its
services beyond core settlement. Former Euroclear CEO Brigitte
Daurelle joined the company’s board of directors earlier this year as an
independent director.
The
platform centralizes and standardizes post-trade matching and netting, cutting
down on the number of payments exposed to settlement risk. CLS was created by
major banks in the late 1990s to reduce counterparty risk in the FX market.
This article was written by Damian Chmiel at www.financemagnates.com.
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