CLS today announced that a Japanese pension has officially started using its FX settlement system (CLSSettlement), which also mitigates risk, via State Street Trust and Banking Co., Ltd. CLS is an important player within the global Forex markets where it provides data and processing solutions as well as FX settlement services.
This is the first Japanese fund that has transferred its FX settlement transactions to CLSSettlement despite Japan being a major FX trading center in the APAC region. CLS just recently started offering FX settlement services to Japanese pension funds and trusts, hence today’s announcement demonstrates the need for this service in Japan.
Today’s announcement is part of an industry-wide campaign led by the Bank of Japan and Japan’s Financial Services Agency to provide buy-side Japanese firms with access to the CLSSettlement platform.
The statement comes after funds headquartered in Japan first gained access to CLS services in 2018 as third party members.
Margaret Law, CLS’s APAC Head of Client Management commented that:
We look forward to working with State Street to facilitate settlement and operational risk mitigation associated with FX trading for pension funds in Japan. We are seeing an increase in participation in CLSSettlement from pension funds and the buy-side more generally, globally and across the region as the buy-side becomes increasingly aware of the risks associated with currency settlement outside of CLS.
This latest development reflects our growing presence in Japan across the buy-side. It is also testament to our strategy of reducing risk and creating efficiencies for a diverse range of third-party clients while bolstering the stability of the FX market.
The President and Representative Director of State Street Trust and Banking Co., Ltd., Mark Hamilton, concluded:
We look forward to bringing our extensive global experience to support the Japanese buy-side community as it accesses settlement risk mitigation through CLSSettlement. This is an important development for the market that we believe will lead to increased interest, and adoption, from Trust funds domiciled here.