State Street in Japan has begun providing access to FX market infrastructure specialist CLS as its settlement platform for a locally domiciled pension fund.
The pension fund will act as a pilot fund for State Street and is the first to migrate its FX settlement to CLS in Japan.
“This is an important development for the market that we believe will lead to increased interest, and adoption, from Trust funds domiciled here [Japan],” said Mark Hamilton, president and representative director, State Street Trust and Banking.
FX settlement is beginning to resonate with Japanese buy-side firms, following a recent effort by Japan’s financial regulators to promote payment-versus-payment (PvP) settlement and netting for FX market participants.
Earlier his month, Nomura Asset Management become the first Japanese-based investment manager to gain access to the platform. Last year, Fidelity International and The Master Trust Bank of Japan (MTBJ) onboarded the first Japanese-domiciled funds onto CLS as third-party participants.
“We are seeing an increase in participation in CLS settlement 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,” added Margaret Law, head of client management, APAC, CLS.