Prepare Link Settlement For Free

The main underlying reason for this is that the liquidity facilities are finite while there is no limit on the total value of the trades that you can attempt to settle via CLS.

Settlement Limit means, with respect to Settlement Per Amount, the standard of amount for settlement which shall trigger settlement; Settlement Threshold Means, with respect to Settlement Per Period, the lowest standard of amount for settlement which may trigger settlement; Sample 1.

A payment schedule is devised by CLS for short currency positions and by given pay-in times during the CLS day (within the settlement window i.e. to CET), the Settlement Member makes the payments to CLS Bank and correspondingly receives payments for its long positions.

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.

CLS is an ongoing process of: submitting instructions - receiving payments of specified currencies from customers. funding - settling pairs of instructions that satisfy all criteria. execution - making pay-outs in specified currencies.

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.

The actual settlement window lasts for 5 hours from 7.00 h to 12.00 h Central European Time (CET)2. During this period of time the opening hours of all involved national RTGS systems overlap, which enables CLS Bank to perform transactions in all currencies on a real-time basis.