U.S. Bank National Association has officially joined CLSSettlement as a settlement member, marking a significant addition to the network. With this inclusion, the total number of settlement members now stands at 76, and U.S. Bank becomes the third institution to join this year. Recognized as the fifth largest bank in the United States, U.S. Bank is based in Minneapolis.
The growing emphasis on effective foreign exchange (FX) settlement risk management and operational efficiency has become crucial for participants in the financial markets as well as for public policy makers. This trend highlights the industry’s commitment to mitigating settlement risks. U.S. Bank’s entrance into CLSSettlement signifies a shift towards adopting payment-versus-payment (PvP) settlement solutions among financial institutions.
PvP is considered the preferred approach to reducing settlement risk, as emphasized in Principle 35 of the FX Global Code, which outlines best practices for the industry.
The Chief Growth Officer of CLS expressed her enthusiasm for U.S. Bank’s participation in CLSSettlement, noting that the inclusion of one of the largest banks by assets is a testament to the benefits that this settlement service brings to participants within the FX markets. CLSSettlement offers not only efficiencies in funding and liquidity through multilateral netting but also plays a key role in risk mitigation via PvP settlement techniques. Currently, CLSSettlement handles over USD 7 trillion daily across 18 currencies for its settlement members and more than 38,000 third-party participants.
In a statement, the Global Head of FX at U.S. Bank highlighted the firm’s expanding FX business, which aids organizations across the United States in managing currency risks with customized mitigation strategies, comprehensive market insights, and reliable execution. Joining CLSSettlement is seen as a pivotal advancement in providing top-tier FX services to clients.
This move is indicative of a larger trend within the financial services industry, where companies are increasingly recognizing the necessity for effective risk management practices and operational excellence in FX transactions. The participation of U.S. Bank in CLSSettlement underscores the ongoing evolution and enhancement of services targeted at achieving greater stability and efficiency in the global FX markets.