The CLS Group (CLS) is a financial market infrastructure company that provides settlement and risk management services to its members, which include banks, broker-dealers, and other financial institutions. The company is based in London and New York, and it operates globally.
CLS was established in 2002 to address the problem of “Herstatt risk,” which refers to the risk of one side of a foreign exchange transaction being completed while the other side is not, due to the time zone differences between financial centers. This can result in one side of a transaction suffering a loss, which can have knock-on effects throughout the financial system.
To address this risk, CLS operates a settlement service that allows its members to settle their foreign exchange transactions on a “delivery-versus-payment” (DVP) basis. This means that one side of a transaction is not settled until the other side is complete, reducing the risk of one side suffering a loss.
CLS also provides a range of other services, including risk management tools, trade processing services, and collateral management services. Its services are used by financial institutions around the world, and it plays a key role in helping to ensure the smooth functioning of the global foreign exchange market.
—
This page was last updated on January 13, 2025.
–