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Metrobank participates in CLS’ settlement service through UBS

CLSCLS, a market infrastructure delivering settlement, processing and data solutions, announced that Makati-based Metrobank will access the CLSSettlement service as a third-party participant through UBS. CLS stated that the addition of one of the largest banks in the Philippines showcases the significant increase in third-party participation in the CLSSettlement service throughout the region.

Margaret Law, Head of Client Management, Asia Pacific, CLS elucidated, “We are thrilled that Metrobank has chosen to use CLS’s settlement service. With the growth of FX trading in many Asian currencies, the issue of settlement risk has become an increasing concern and it is essential that all market participants, buy side or sell side, implement appropriate FX risk mitigation services such as CLSSettlement.”

The company enunciated that third-party (regional/ third-party banks, funds, corporates and non-bank financial institutions) participation in the settlement service rose by 15 percent while respective average daily gross values settled increased by 17 percent in 2018. During the same time period, average daily gross values settled by third-party banks in the region also increased by 16 percent.

Bob Murga, Metrobank Operations Group Head articulated, “Our participation in CLSSettlement will enable Metrobank to mitigate settlement risk and reduce operational costs related to FX trading. Ultimately, CLS creates opportunities for us to expand our business by having access to a wider pool of counterparties.”

Christian Stolcke, Global Head of Banks at UBS enunciated, “We are delighted to provide Metrobank access to CLSSettlement. Wider participation in the service will help to build a more robust global FX market through the mitigation of FX settlement risk. Furthermore, in times of increasing intraday funding and liquidity cost, CLS brings considerable reduction of liquidity consumption through its netting effect.”

As foreign exchange volumes continue to increase, the recent Bank for International Settlements’ quarterly review indicates that close to $9 trillion of payments remain at risk from settlement risk on any given day. Consequently, it remains critical that all market participants strive to adopt global best practices that mitigate risks and establish stronger controls, as well as improve operational efficiencies. In addition, industry initiatives such as the introduction of the FX Global Code of Conduct have motivated FX market participants, including those in Asia, to adopt a best practice approach to settlement and post-trade processing.

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