UBS takes 20% of active third-party CLS business with Saxo deal

UBS believes it has gained a 20% share of the third-party business conducted via the continuous-linked settlement (CLS) system. UBS said Denmark's Saxo Bank went live on the service today.

The Saxo deal means UBS is now live with 20 third-party institutions and has signed at least another 10 parties to use its access to CLS, a foreign exchange settlement system. CLS, launched in September 2002, was designed to reduce the costs and settlement risks in foreign exchange trade settlements by settling cross-border trades in one place. Previously, such trades were settled in both countries - often at different times, depending on time-zone differences. CLS surpassed daily transaction volumes of more than $1 trillion in February 2003.

CLS member banks hold an account with New York-based CLS Bank for every currency traded. CLS Bank then settles the trades on a net-funded basis over a five-hour period when the opening times of the country-specific real-time global settlement systems overlap. Alternatively they are placed in a queue and monitored until they are settled.

“This program offers banks and financial institutions a wide range of modular services enabling them to concentrate on their core competencies and deploy their resources more effectively,” UBS said in a statement.