Clearstream Banking is to provide continuous linked settlement (CLS) participants with a range of collateral management and securities processing tools, ready for the system's launch next year.
CLS is creating a new global infrastructure for reducing temporal risks in cross-border foreign exchange transactions.
In order to guarantee smooth settlement and payment flows, CLS users may have to post collateral with settlement member banks, who in turn will post collateral with the main central banks.
Clearstream is offering to raise liquidity for CLS users at both the central bank and participant level by acting as a collateral transfer agent, covering shortfalls in accounts between its members.
Gerd Hartung, head of collateral products, Clearstream Banking global securities financing (GSF) services, says: "With our collateral management services and existing links with major central banks, we at Clearstream Banking are ready to meet the needs and requirements of international banks as they seek to reduce risk and optimise capital resources through foreign exchange settlement".
CLS Bank is scheduled to come on stream mid 2002, when founding settlement members will begin to settle foreign exchange transactions between themselves.