MUFG Bank becomes first Japanese lender to join CLSNet

abdelaziz Fathi

FX settlement specialist CLS Group has onboarded Japan’s biggest lender, Mitsubishi UFJ Financial Group (MUFG), to CLSNet, the foreign exchange bilateral payment netting system for emerging currencies. MUFG is the world’s fourth-largest bank by assets and the largest non-Chinese lender.

MUFG

CLSNet service covers approximately 120 currencies and MUFG is joining its growing community of global and regional financial services institutions, which includes eight of the top ten global banks. The centralized platform was originally built with IBM using the Hyperledger Fabric enterprise blockchain.

Using CLSNet helps FX market participants adhere to the FX Global Code – the industry’s global principles of good practice for the FX market. Instead of settling every transaction individually, automated netting reduces the required margins, leaving more funds available for other purposes. As such, the solution helps increase liquidity, reduce counterparty risk and costs of manually calculating netting or settling a higher volume of transactions. Plus, the cost of settling emerging market currencies tends to be relatively high.

MUFG Bank is the first Japanese bank to commit to using CLSNet, which 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. In August 2022, the group reported a record $100 billion in the average daily notional of net calculations in CLSNet. The milestone marks an increased adoption from market participants and follows the 179% year-on-year increase in the average daily notional of net calculations in H1 2022.

CLSNet 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.”

 

Read this next

Executive Moves

Avelacom appoints Timothy Wong to run newly Hong Kong office toward APAC expansion

Avelacom helps to achieve sub-millisecond speed of market data and order execution across both derivatives exchanges and crypto markets.

Executive Moves

XS.com hires Ahmed Negm, a popular market analyst on CNBC, Sky News, Bloomberg’s Asharq

“Ahmed’s expertise and passion for understanding the intricacies of the financial markets will be invaluable as we continue to grow our client base and expand into new jurisdictions.”

Institutional FX

ATFX uses blockchain to help clients verify IBs and vice versa

ATFX said it has been working on the IB verification project for a few months.

Industry News

Research market in dire straits as SEC’s ‘no-action’ letter on MiFID II lapses in June – survey

“Of all the regulatory news that has hit the research market in the last few months, this is the one change that will fundamentally impact what fund managers can access and pay for in future.”

Executive Moves

Wombat appoints ex-abrdn Richard Charnock as UK platform turns to Europe

Launched in 2019, Wombat provides a dedicated mobile investing platform – available on both iOS and Android – offering users both range and choice.

Institutional FX

Broadridge integrates Point Focal’s pre and post-market reports

“Point Focal provides a unique lens on the market which will help add alpha to the trading process and these new insights will rapidly improve performance while mitigating execution risk and simplify trading.”

Technology

XCritical integrates with Brokeree Solutions, allowing its clients to launch copy trading 

The forex software provider – XCritical, has integrated Social Trading by Brokeree Solutions into their CRM system.

Industry News

HKEX partners with Saudi exchange for cross listings, ESG, Fintech

“The Kingdom of Saudi Arabia, and the broader Middle Eastern region, are one of the world’s most dynamic and exciting economic and innovation hubs and also home to some of the fastest growing investor groups in the world. Hong Kong and HKEX’s markets offer significant opportunities for international investors and corporates, including unrivalled connectivity to the Mainland Chinese markets through our unique Connect programmes. This agreement signals the beginning of even greater collaboration between our companies and our home markets, and we look forward to exploring many future areas of cooperation.”

Executive Moves

CMC Markets Connect relocates APAC team led by Peter Foster to Singapore

“Singapore is a vibrant city and is now undoubtedly seen as Asia’s leading financial hub. The decision to bolster the CMC Markets Connect team here will help us cement the company’s position as a leading provider of multi asset liquidity and comprehensive trading solutions across the region.”

<