GLOBAL - Custodians will now be able to settle fund manager clients' FX transactions thanks a new agreement with the CLS Group.
Transactions can now take place through the continuous linked settlement (CLS) foreign exchange system, run by CLS Bank International.
Currently, CLS Bank - launched on September 9 - settles over US$300bn (£192bn) per day in FX transactions between CLS Bank settlement members or their customer banks.
A significant proportion of the US$1.2trn a day FX market are transactions settled by custodian banks on behalf of fund manager clients. Estimates suggest that some 10% of all FX transactions are related to crossborder securities trading.
Chairman of CLS Group, Suzanne Labarge, said: “Cross border securities trading is accounting for a growing proportion of FX transactions and the straight through processing and elimination of the associated risk involved with these transactions is a priority for the market as a whole.”
The CLS Custody Working Group, representing 23 banks, will integrate the Custodian Fund Identifier system in order to identify a fund so that settlement can occur using CLS, thus achieving a higher degree of straight through processing and reducing the risks associated with using multiple fund identifiers.
CLS Bank will work to implement the change with a view to activating the service for fund managers by the end of 2003.
Most respondents in this week's Pensions Buzz do not think businesses should be able suspend AE contributions if in financial distress.
Former BHS owner Dominic Chappell has lost the appeal against his section 72 conviction and sentence for failing to hand over information to The Pensions Regulator (TPR).
This week's top stories include Marsh and McLennan Companies agreeing to buy JLT, and the home secretary calling for AE to be scrapped in a no-deal Brexit scenario.
Lesley Titcomb says the watchdog wants closer interactions with pension funds to spot problems sooner and act before having to use its more stringent powers