CLS may affect credit lines

Nicoletta Stella, CLS project manager at ABN Amro, told delegates that the advent of third-party CLS services, whereby a CLS shareholder settles client banks’ trades on their behalf, could replace a large credit line. "The settlement member takes the risk," she said. "Credit lines are no longer a restriction."

However, she warned that implementation of third-party services may take longer than some firms have claimed. "It affects every department of forex," she told delegates. "Some service providers say they can have a third party live in one month. You can complete the technology implementation, but that is not exploiting the full potential of the CLS system -- it takes longer than expected."

Stella told delegates that the launch of CLS was an "agent for change" in the FX markets and that it has already helped negate part of one of the biggest reasons for settlement risk -- time zone differences. The CLS settlement window, she said, starts at 7am London time and closes at midday London time.

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