Aleri’s CLS Server is enabling ABN AMRO to provide third party services for Continuous Linked Settlement (CLS) on foreign exchange transactions. Following the launch of the bank’s proprietary trading in October, CLS Server is now live for third and fourth party services at ABN AMRO and has underpinned the bank’s success in winning multiple new mandates, including the Bear Stearns mandate announced at Sibos last month.
Aleri’s CLS Server, available on Tandem and UNIX, automates the management of CLS clearing among member-banks and third parties, offering correspondent clearing facilities by the settlement member. CLS Server emulates the processes of CLS Bank used to determine acceptable trades, maintain positions (sub-accounts), manage funding of short positions and timely disbursement of surplus balances. The application reduces the settlement risk of high-value transactions to its member banks and increases operational performance and efficiency.
Details of bilateral agreements for each CLS clearing customer of the bank are held within CLS Server, and these determine Pay-In schedules and release of surplus funds. The agreements also include details of forward daily net limit, settlement limits and liquidity terms. The liquidity terms dictate when funds are to be received and disbursed and any spreading of payments for the remittance schedule. In addition there are various reporting options available to improve the level of information about trades.
Says Joerg Pinkernell, Senior Vice President of Global Product Management, Settlement & Liquidity Group at ABN AMRO: “This project has been exceptionally smooth with robust performance and speedy responses on intra day trading. With its web front-end and extensive functionality, the Aleri solution has helped to place us at the forefront of this important development to reduce risk in foreign exchange transactions and the technology can readily be applied to other instruments should these be part of the CLS remit in the future.”
Adds Aleri’s senior vice-president International Operations, John Mason: “ABN AMRO has already won 12 new third party service mandates. As more banks move to CLS, transaction volumes will increase while settlement cycles decrease, placing increased pressure on banks to keep track of their available funds throughout the day. This is why Aleri has designed a Liquidity Management application to enable banks to monitor their liquidity in near real-time to improve capital utilisation and increase profitability. Managing the liquidity resources will be critical to the effectiveness of a bank’s service offerings not only for CLS settlement members but also to banks providing clearing, Nostro or any other type of cash management services.”