Continuous Linked Settlement - benefits

HSBC offers its third parties, be they commercial banks, non-bank financial institutions or corporate clients, the ability to access the many benefits of Continuous Linked Settlement (CLS). This includes multi-currency accounts, liquidity and credit lines, intraday information, timely and efficient disbursements, standard settlement instructions, reconciliation services and access to HSBC's range of advanced cash management techniques.

CLS has the potential to provide its users with:

• The ability to undertake more business, possibly with a broader range of counterparties as a result of the elimination of counterparty settlement risk
• The ability to mitigate the impact of any future capital charge that regulators may impose on banking institutions exposed to high levels of settlement risk
• Settlement finality within a legal framework that will ensure that in the event of a liquidation, trades cannot be unwound to the start of the day*
• Protection of principal values resulting from the payment versus payment nature of CLS settlement where simultaneous exchange of currencies takes place
• Faster and easier reconciliation of accounts resulting from the need only to settle net rather than gross values
• Better liquidity management and improved cash management resulting from the provision of better operational and management information earlier in the settlement day
• The ability to reduce back office processing costs primarily resulting from easier reconciliation and from a significant decline in payment volumes and values due to netting
• The potential to reduce Nostro activity by focusing on a smaller number of global service providers able to meet your cash management and liquidity needs across a range of currencies

Please contact your Global Payments and Cash Management sales manager for further information.

*NB: Third parties and their settlement members are still exposed to bilateral payment settlement risk albeit in respect of significantly reduced netted values.