Continuous Linked Settlement

Financial institutions have increasingly complex banking requirements. Regulatory requirements and industry initiatives are creating demand for enhanced intra-day liquidity management and operational efficiencies across different time zones. As a result, settlement risk has become a growing concern. Continuous Linked Settlement (CLS) is an industry initiative to eliminate the settlement risk in foreign exchange transactions. This is achieved by using a 'payment versus payment' method, which provides a simultaneous exchange of currency values through CLS Bank International.

HSBC’s commitment to the CLS proposition has been dedicated from inception. HSBC is a shareholder of CLS Services Ltd and an active settlement member. HSBC has a representative on the CLS Services Ltd board and has been closely involved with the development of the process. HSBC was one of three banks involved in beta testing the member application software. Through its active involvement HSBC has gained extensive and detailed knowledge of the inner workings of CLS.

HSBC intends to settle all its eligible trades through CLS and will be one of the largest volume providers now that the system is live and operational.

HSBC’s* CLS service proposition provides:

• Enhanced Nostro payment services to 40 per cent of the active settlement members to enable them to meet the timed payment demands of the CLS process
• A full settlements service to third party institutions which do not qualify for direct CLS membership or which choose not to make the investment
• A range of multi-currency and cash management benefits, including:
  • Reduction of costs
  • Reduced risk profile
  • Ability to increase FX business without increasing risk
  • Greater control of intraday/end-of-day cash positions
  • Reduced pressure on back office staff
  • Increased efficiency
  • Greater certainty through increased control

We hope that you will find the information contained here useful and informative and would welcome the opportunity to discuss any aspect of CLS with you.

* CLS services are provided by HSBC Bank plc for the HSBC Group. All further references to 'HSBC' in this part of the website should be construed as references to HSBC Bank plc.