Direct membership of CLS Settlement brings increased efficiency and liquidity as well as reduced settlement risk across the bank’s FX operations

Finastra today announced that Absa Bank Limited is using its PAYplus for CLS platform to support the bank’s direct participation in CLS settlement, which provides continuous linked settlement services for the global foreign exchange market. Direct membership will allow Absa to benefit from improved efficiencies and increased liquidity in supporting its foreign exchange trading operations and in extending third party settlement services to new and existing clients.

Neil Slabbert, Chief Operating Officer, Corporate and Investment Banking at Absa, said, “Joining the CLS settlement service is an important milestone for Absa and we needed a technology partner we could trust. We already have a strong relationship with the Finastra team and they demonstrated strong credentials as a market leader in CLS settlement software. Finastra PAYplus for CLS provides us with a reliable platform as we grow our business in this area.”

Absa became a direct CLS settlement member at the end of 2017, having previously been an associate member, operating through Barclays. To join directly, Absa needed to deploy a solution that would automate the capture and processing of FX transaction messages according to CLS rules and operating procedures, distributing these to all relevant CLS settlement counterparties. Finastra PAYplus for CLS enables Absa to proactively monitor its CLS activities, matching and reconciling ‘pay-in’ and ‘pay-out’ schedules, assessing credit in real-time and feeding data to internal bank systems and third parties automatically, while also eliminating risk for the settlement of FX trades.

Nadeem Syed, CEO at Finastra said, “As the largest provider of CLS settlement software to the FX market, Finastra is working with Absa to enable the bank to reap the full advantages of CLS settlement membership. As well as gaining the ability to take on and manage their own settlement risk on FX transactions, they also now have the potential to capitalize on new opportunities – for example by offering third-party settlement services to other banks and corporates in the region.”

Brad Bailey, Research Director, Capital Markets, Celent, A Division of Oliver Wyman said, “As the FX market evolves, market participants are striving for capital, risk and operational efficiencies. In order to maximize the benefits of becoming a CLS settlement member, active FX firms need to ensure their technology infrastructure works seamlessly with that of CLS. The right technology will drive the highest level of automation on a real-time basis, optimizing liquidity and minimizing risk. “