MUFG Bank Signs Up to CLSNet, CLS’s Bilateral Payment Netting Calculation Service

MUFG Bank (NYSE:MUFG) claims it is the “first” Japanese bank to commit to using CLSNet, CLS’s bilateral payment netting calculation service “for over 120 currencies.”

MUFG Bank will “join the expanding CLSNet community of global and regional banks, which includes eight of the top ten global banks.”

CLSNet reveals that it “has seen a substantial rise in adoption this year, with a 495% year-on-year increase in the average daily notional of net calculations in Q3 2022.”

The centralized platform “standardizes and automates post-trade matching and netting processes across the global currency spectrum. As market participants continue to focus on the risks associated with post-trade processing and settlement in currencies outside of CLSSettlement,”

CLSNet offers standardization and automation “through a single platform which mitigates risk, reduces operational costs and optimizes liquidity for these currency flows.”

Lisa Danino-Lewis, Chief Growth Officer, CLS, commented:

“We are delighted to welcome MUFG Bank as the first Japanese participant in CLSNet. As the global network continues to grow, participants will benefit from the expanding range of netting counterparties, as well as the improvements to liquidity optimization, operational efficiencies and risk mitigation benefits of the service.”

Junya Kishida, Head of Global Markets Operations Division, MUFG Bank, said:

“CLSNet provides unparalleled standardization and centralization of post-trade processes across the global currency spectrum. Our participation in the service will be integral to our ability to improve operational efficiency and reduce risk for the currencies that are not currently eligible for CLSSettlement. CLSNet also supports MUFG Bank’s adherence to the best practice settlement risk principles of the FX Global Code.”

Akira Kato, Head of Client Engagement, Asia Pacific, CLS, added:

“The addition of MUFG Bank to CLSNet reinforces the value the service is delivering to the broader FX market. With the growth of FX trading, particularly in Asian currencies, it is essential that market participants adopt effective solutions to manage risk for their post-trade processes.”

Using CLSNet reportedly supports market participants’ “adherence to principles 35 and 50 of the FX Global Code.”

All trade instructions “sent to the platform are automatically validated and matched to the pre-determined cut-off times between counterparties for each currency.”

This ensures that “only matched trade instructions are included in the automated net calculation and provides a single common record of the net payment obligations.”

By automating the netting calculation process via a centralized platform, users “benefit from greater operational efficiency through substantially enhanced straight-through processing as well as increased risk mitigation for currency flows not settling via CLSSettlement.”

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