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BNY Mellon and ING agree to join CLSNet community
Amidst record growth in adoption, BNY Mellon and ING agree to join netting calculation platform
BNY Mellon, the world’s largest custodian bank1 and ING, the largest Dutch bank,2 have agreed to join CLS’s bilateral payment netting calculation service for over 120 currencies, CLSNet. They are the latest participants to join the growing CLSNet community, which includes eight of the top 10 global banks.3
CLSNet standardizes and centralizes post-trade processes across a wide range of trade types, including same-day trades and NDFs, which helps to reduce risk and achieve greater operational efficiency for a broad range of currency flows. As settlement risk in the FX market continues to be a focus, especially in emerging market currencies and other growing segments of the market, participants are looking for ways to mitigate risk effectively via automated post-trade services such as CLSNet.
CLSNet has experienced record growth this year, underscoring the industry’s support for the service. The average daily notional value of net calculations in CLSNet have consistently exceeded USD115 billion in the last 12 months, and on 20 December 2023 it reached a record daily notional of USD445 billion netted.
Commenting on the new additions to CLSNet, Lisa Danino-Lewis, Chief Growth Officer, CLS said, “We are delighted that BNY Mellon and ING are joining CLSNet’s growing community of users and will benefit from the risk mitigation, operational efficiencies and liquidity advantages that the service delivers. In addition to banks, CLSNet is directly accessible to most market participants, including funds, corporates and non-bank financial institutions, making its benefits widely available to the FX industry.”
Jason Vitale, Head of Global Markets Trading, BNY Mellon added, “We are continuously identifying the latest solutions that will enhance our clients' experience across the trade lifecycle. By joining CLSNet, this will enable us to provide clients with improvements in intraday liquidity and execution efficiency.”
“CLSNet provides the functionality to strengthen and standardize the post-trade processes across the global currency spectrum”
FM Operations Lead
ING
Robbert Zee, FM Operations Lead, ING added: “CLSNet provides the functionality to strengthen and standardize the post-trade processes across the global currency spectrum. As the largest Dutch bank with significant global operations, 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 FX market participants’ adherence to the updated FX Global Code, particularly to Principles 35 and 50,4 as all trade instructions sent to CLSNet are validated and matched up 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 that there is a single common record of the net payment obligations. By automating the netting process via a centralized platform, users benefit from greater operational efficiency and increased risk mitigation for currencies that are not currently eligible for CLSSettlement.
1 Asian Banker: Custodians by Assets Under Custody 2022 2 Statista Research Department: 10 Largest Banks in the Netherlands by total assets (2022) 3 According to the 2022 Euromoney Foreign Exchange Survey.4 Principle 35 provides that market participants should reduce their settlement risk as much as practicable and encourages the use of automated settlement netting systems. Principle 50 provides that market participants should properly measure, monitor and control their settlement risk and includes recommendations concerning the confirmation of bilateral net amounts and the agreement of predetermined cut-off points.