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Continuous Linked Settlement (CLS) is an industry initiative to eliminate the settlement risk in foreign exchange transactions. This is achieved by using a 'payment versus payment' method, which provides a simultaneous exchange of currency values through CLS Bank International.

Continuous Linked Settlement (CLS) is an inter- national payment system which was launched in Sep- tember 2002 for the settlement of foreign exchange transactions.

A good example is a USD/JPY transaction: Outside CLS, the seller settles his JPY on T-1, whilst the buyer settles the USD on T. With CLS, the two flows are simultaneously settled. This is the Payment versus Payment (PvP) principle.

Continuous Linked Settlement (CLS) is a global initiative to reduce foreign exchange settlement risk by settling both legs of foreign exchange transactions simultaneously. Transactions are settled across the books of CLS Bank International (CLS Bank), a special purpose bank established to facilitate the CLS process.

CLS is a unique financial market infra-structure of critical importance to the FX industry. Swift provides the secure resilient network connectivity channel to reach CLS's services.

The CLS settlement process flow is for member banks to send their foreign exchange transaction information to CLS during the day, after which CLS creates a schedule of net payments that the member banks must pay to CLS.

CLS operates as a Payment versus Payment (PvP) system. Time zone differences increase the risk of one party defaulting before both sides of the trade are settled. PvP eliminates time zone risk because both sides of a transaction are settled simultaneously. Settlement in CLS is final and irrevocable.

The primary advantage of CLS: reducing risk International banks have been the first to adopt the CLS system in order to reduce their FX settlement risk, also called “Herstatt risk”. For a bit of history, in 1974, the bankruptcy of the German bank Herstatt blocked the dollar interbank payment system.

Continuous Linked Settlement (CLS) is an industry initiative to eliminate the settlement risk in foreign exchange transactions. This is achieved by using a 'payment versus payment' method, which provides a simultaneous exchange of currency values through CLS Bank International.

Continuous Linked Settlement (CLS) is an inter- national payment system which was launched in Sep- tember 2002 for the settlement of foreign exchange transactions.

A good example is a USD/JPY transaction: Outside CLS, the seller settles his JPY on T-1, whilst the buyer settles the USD on T. With CLS, the two flows are simultaneously settled. This is the Payment versus Payment (PvP) principle.

Continuous Linked Settlement (CLS) is a global initiative to reduce foreign exchange settlement risk by settling both legs of foreign exchange transactions simultaneously. Transactions are settled across the books of CLS Bank International (CLS Bank), a special purpose bank established to facilitate the CLS process.

CLS is a unique financial market infra-structure of critical importance to the FX industry. Swift provides the secure resilient network connectivity channel to reach CLS's services.

The CLS settlement process flow is for member banks to send their foreign exchange transaction information to CLS during the day, after which CLS creates a schedule of net payments that the member banks must pay to CLS.

CLS operates as a Payment versus Payment (PvP) system. Time zone differences increase the risk of one party defaulting before both sides of the trade are settled. PvP eliminates time zone risk because both sides of a transaction are settled simultaneously. Settlement in CLS is final and irrevocable.

The primary advantage of CLS: reducing risk International banks have been the first to adopt the CLS system in order to reduce their FX settlement risk, also called “Herstatt risk”. For a bit of history, in 1974, the bankruptcy of the German bank Herstatt blocked the dollar interbank payment system.