CLS looks to expand third-party FX settlement services in South Korea

FX market infrastructure provider CLS Group (CLS) today announced its intention to work with its settlement members to expand its third-party settlement services in Korea.

This follows the recent announcement by the Bank of Korea that it is expanding the range of FX transactions eligible for CLS payment-versus-payment (PvP) settlement to include those of non-bank financial institutions.

The Korean won currently accounts for 1.2% of daily currency turnover globally, and the expansion of third-party settlement services via CLS is an important step towards mitigating settlement risk for a wider pool of counterparties.

“Today’s announcement is the result of our ongoing collaboration with the Bank of Korea and FX market participants”, explained David Puth, CEO of CLS. “Korea is an established financial center and the Korean won is among the most actively traded currencies in the Asia Pacific region. Ensuring mitigation of the most significant risk counterparties face in FX transactions – settlement risk – remains a key priority for our organization.”

“We have seen an increase in third-party volumes transacted via CLS globally, so this policy change is a welcome development for the FX community. Previously, only FX-licensed banks in Korea were permitted to settle in CLS via a third-party service provider, so this development is a critical step towards further mitigating settlement risk in Korea and the wider FX market”, added Rachael Hoey, Head of Asia for CLS.

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