"A small percentage of trades were rescinded and that largely depended on what individual arrangements institutions had within their Isda agreements," Close says. "The vast majority of Lehman trades were processed smoothly and some of these were for very large amounts. Citi was the entity that authorized Lehman’s instructions and it can’t have been an easy decision for it to make, but it stood behind the deals and they went through. CLS worked exactly as it should do. It took settlement risk out of the market. CLS users knew they could leave their trades in it."
Andy Brown, global head of FX at HSBC, agrees that CLS did what it was designed to do. "I think it worked very well," he says. "People are starting to worry more than ever about credit and settlement risk. While CLS doesn’t remove settlement risk completely, it does to a...
