The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.


All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.
Foreign Exchange

CLS pilots expansion of PvP

Increased trading of emerging market FX has prompted settlement provider CLS and some of the world’s largest banks to explore options for extending payment-versus-payment to a wider range of currencies.

Emerging-markets-cogs-iStock-960.jpg
Photo: iStock

Payment-versus-payment (PvP) is a settlement mechanism that ensures that the final transfer of a payment in one currency occurs only if the final transfer of a payment in another currency or currencies takes place.

In July, the Global Foreign Exchange Committee published the results of a three-year review of the FX global code. Given the potential risks associated with FX settlement, the committee identified a need to strengthen its guidance on settlement risk to place greater emphasis on the usage of PvP settlement mechanisms.

Principle 35 of the code now states that market participants should reduce their settlement risks as much as practicable, including by settling FX transactions through services that provide PvP settlement.

Nick-Pedersen-NatWest-759.jpg
Nick Pedersen, NatWest Markets

One of the actions highlighted in a June 2020 Financial Stability Board (FSB) report was to encourage observance of existing international guidance on the use of PvP and develop options that could increase its use – as well as understanding of why it might not be used.

Analysis conducted by the Bank for International Settlements (BIS) suggests that the proportion of trades executed with PvP protection has fallen in recent years.


You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree