Nomura and CLS Group launch settlement services targeting Japan based funds


CLS Group today announced that Japanese asset manager Nomura Asset Management Co., Ltd (NAM) will start offering settlement services to funds headquartered in Japan through CLS’s settlement system.

NAM will offer CLS settlement services to 21 investment trust funds in Japan in collaboration with Japan Trustee Services Bank, Ltd. (JTSB), The Nomura Trust and Banking Co., Ltd. (NMTB) and The Master Trust Bank of Japan, Ltd. (MTBJ).

NAM and its partners will use the custodial services of the following tier 1 banks Sumitomo Mitsui Trust Bank (U.S.A.) Limited for JTSB, BBH for MTBJ and Brown Brothers Harriman & Co. (BBH) and Citibank, N.A. (Citi) for NMTB.

Although major Japanese securities companies and banks are already using CLS’s settlement systems to settle Forex transactions, pension funds and asset managers have not been able to use the same service. This is because their settlement processes too many intermediaries such as global custodians, trust banks, and counterparty brokers.

However, Japan’s Financial Services Agency in collaboration with the Bank of Japan have facilitated discussions among wholesale participants in the Forex markets to make today’s announcement possible. This was based on a recommendation from the Basel Committee on Banking Supervision that large players should use payment-versus-payment (PvP) settlement systems whenever possible.

Margaret Law

Margaret Law

CLS APAC, Head of Client Management, Margaret Law, commented that:

We are seeing increased interest in the mitigation of settlement risk by the asset management community in Japan, and in Asia Pacific more generally, as a result of the operational best practices which are being expected by end clients and promoted by drivers such as the FX Global Code. The latest announcement around the buy-side take up of CLSSettlement in Japan is testament to this trend and we expect an ongoing increase in participation in the region as a result.

NAM’s Managing Director of Trading, Kunihisa Ono, said:

We are pleased to be the first asset manager headquartered in Japan to provide Japanese domiciled funds access to CLS Settlement. We are managing a wide range of funds and trading foreign exchange with both domestic and foreign counterparties. We need to mitigate settlement risk, and think that CLS is effective in that respect. We are preparing to further expand CLS settlement in the future.

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