When CLS Bank finally launched its foreign exchange settlement services in September 2002 it was pretty well guaranteed success. After all the delays in implementing the system, combined with all the practical, legal and diplomatic hurdles that the project had to overcome, there was little chance that the 52 settlement banks, or the initiative's management team, would allow it to fail.
| Joseph de Feo, president and CEO of CLS: looking forward to a strong year |
But it has still beaten its own expectations. "This project has worked even better than we thought it would," says Joseph De Feo, president and CEO of CLS Bank. "It is putting a smile on the faces of central banks and settlement members. Errors have been pretty much eliminated." Pretty much. A glitch in March halted a day's settlement in one currency, and prompted small but embarrassing compensation claims.
The system itself is quite simple. It provides transnational settlement for forex trades in seven currencies, settling each side of each trade simultaneously. Settlement banks feed their trades into the system within two hours of execution and then at set points during the day the trades are matched and settled.