CLS Group (CLS), a provider of risk mitigation and operational services for the global Forex market, today announces that Samsung Securities Co., Ltd. (KRX:016360) has become the first non-bank financial institution (NBFI) to join the CLS system via third party access in South Korea.
Samsung Securities is now settling Forex transactions in CLS via its third party service provider, KEB Hana Bank.
Samsung Securities is the first NBFI to obtain third-party access to CLS. The new partnership marks an important milestone for both CLS and the South Korean Forex market. In December 2014, the Bank of Korea, in consultation with the Ministry of Strategy and Finance, announced a rule change to expand the range of FX transactions eligible for CLS payment-versus-payment settlement to include those of NBFIs. This was to a great extent due to CLS’s efforts with the South Korean central bank and local FX market participants to offer further mitigation of settlement risk in the country.
Rachael Hoey, Head of Asia at CLS, says,
“This marks an important milestone in our efforts to broaden access to CLS in Asia. Expansion of third-party settlement services is a key part of our strategy to mitigate settlement risk, underpin financial stability and deliver the unique benefits of CLS to a wider pool of counterparties. We look forward to continuing our work with the South Korean financial community to encourage and facilitate participation from the NBFI sectors.”
Byungyong Lee at KEB Hana Bank says,
“The ability for NBFIs to access CLS is crucial to removing barriers to entry and supporting the continued growth of South Korea’s FX market. As the first bank in South Korea to offer third-party services to NBFIs, we are able to provide an enhanced service offering to our clients. By facilitating access to CLS settlement, we are able to pass on key benefits of the service to our non-bank clients, such as FX settlement risk mitigation and efficiencies through reduced counterparty credit risk.”
SeongMin Han at Samsung Securities adds,
“The ability to settle via CLS adds another level of control to our trading process while ensuring the effective mitigation of FX settlement risk. We also expect to benefit from a greater capacity to trade as a result of reduced counterparty credit risk and through the introduction of more automated processes and streamlined trading operations”.