The Koean Won will is the latest currency to become eligible for settlement via CLS Bank. CLS Bank International said that the Won would join the system as soon as all the requirements in its rules are satisfied, the necessary regulatory approvals are obtained, and the technical implementation is completed. The objective is for the currency to become eligible during 2004.
“With the addition of the Korean Won, we are continuing to expand the range of currencies eligible for settlement at CLS Bank,” says Joseph De Feo, President and CEO of CLS Bank. “In the ten months since the CLS Bank service launched, we have demonstrated our value to the market, and with rising volumes and participation the market has shown a high degree of confidence in us. This new significant development further demonstrates the strength of support for CLS Bank amongst the global banking community. We now look forward to delivering our risk, liquidity and efficiency benefits to a new and exciting section of the market.”
The new currency will join the Australian Dollar, Canadian Dollar, Euro, Japanese Yen, Pound Sterling, Swiss Franc and United States Dollar as CLS Bank eligible currencies. CLS Bank is concluding final preparations and awaiting regulatory approval for adding the Danish Kroner, Norwegian Krone and Swedish Krona and the Singapore Dollar as CLS Bank eligible currencies later in 2003. The Hong Kong and New Zealand Dollars, which were previously endorsed in principle by the CLS Bank Board, are expected to follow in 2004.
“With the inclusion of the Korean Won as a CLS currency, commercial banks in Korea will benefit tremendously from CLS Bank’s simultaneous settlement of the two sides of currency trades,” says Shang Heon Lee, Assistant Governor of the Bank of Korea. “CLS will enable commercial banks not only to eliminate FX settlement risk but also reduce funding costs and minimize operational risks through multi-currency net funding and STP (straight through processing). Thus, it will help strengthen the competitiveness of the Seoul foreign exchange market and promote the internationalisation of the Korean Won.”
CLS Bank says a total of 54 banks are now settling payment instructions associated with foreign exchange trades through its platform, with over 60 Settlement Member customers (“third parties”) also live. CLS Bank is now settling on average over 80,000 of these instructions each day by its Settlement Members, with a gross value in the region of US $ 1 trillion.