IAP.L Regulatory News (IAP)

6 Apr 2009 12:00



CLS and ICAP joint venture to reduce risk and cost in pre-settlement processing for global FX markets

Leading banks support new business to deliver post trade aggregation services

London and New York, 6TH April 2009 - CLS Group, the global industry standard for FX settlement services, and ICAP (IAP.L), the world's leading inter-dealer broker announce they are creating a new joint venture to provide trade aggregation services to participants active in the over the counter FX market.

The new business is designed to address the rapid increase in foreign exchange trading as an asset class by a widening group of hedge funds, algorithmic traders, retail and institutional market participants, which have brought substantially higher volumes to the foreign exchange industry. Many of these participants are prime brokerage clients of the banks. The new aggregation service will provide the means to reduce operational risk, rationalise and consolidate legacy post trade processes and reduce post trade costs in the global FX markets.

The initial group of banks that have committed support to the joint venture are: Citigroup (NYSE:C), Deutsche Bank (XETRA: DBKGn.DE / NYSE: DB), J.P. Morgan (NYSE:JPM) and Royal Bank of Scotland (RBS.L). 

Other significant FX prime broking banks will be invited to become part of the founding group. Participating banks which are not part of the founding group will be able to participate in the service, subject to the same pricing schedule as the founding banks.

The joint venture will be a CLS subsidiary, 51% owned by CLS Group and 49% owned by ICAP, operating within the CLS regulatory framework. Technology will be provided by Traiana Inc, an ICAP company, through its Harmony Network. By closely integrating operations between CLS Bank and Traiana Inc's Harmony Network the service will leverage existing connections that the founding banks and others have in place, to accelerate adoption and benefits to all participants. The trade aggregation service is expected, subject to regulatory approval, to be in operation in the middle of this year.

"We have a real opportunity to strengthen the Foreign Exchange market infrastructure with this new joint venture with CLS," said Mark Yallop, Chief Operating Officer, ICAP plc. "By bringing together the leading players in the industry and a sound technology platform, we can reduce risk and increase industry capacity to create the opportunity for very material further growth in the market." 

"CLS Bank is actively extending the coverage of its settlement risk elimination service - more participants, more currencies and more FX instruments," said Rob Close, Chief Executive Officer of CLS Group and President and CEO of CLS Bank International. "Additionally the most active players in the very fast growing high frequency, low value segment have very particular pre-settlement needs. CLS Group's new business with ICAP will contribute towards meeting these needs, which alongside the other CLS strategic initiatives on risk mitigation and efficiencies are designed to benefit the wider customer base and market."

-Ends-

Conference Call

The joint venture partners will host a conference call for media today at 2.00pm (BST). The call can be accessed by using the UK dial-in + 44 (0) 20 7806 1957 or US dial in +1 718 354 1389 and passcode 1418445.

A replay of the conference call will be available after the event until midnight on 20 April 2009 by dialling +44 (0) 207 806 1970 or +1 718 354 1112 and passcode 1418445#. 

For further information please contact:

CLS Group:

ICAP:

Notes to editors:

About CLS

CLS Bank provides the largest multi-currency cash settlement system, eliminating settlement risk for over half the world's foreign exchange payment instructions.

Owned by the foreign exchange community, CLS delivers greater operational efficiency when settling payment instructions related to trades executed in six traded financial instruments and in 17 major currencies (US Dollar, euro, UK Pound, Japanese Yen, Swiss Franc, Canadian Dollar, Australian Dollar, Swedish Krona, Danish Krone, Norwegian Krone, Singapore Dollar, Hong Kong Dollar, New Zealand Dollar, Korean Won, South African Rand, Israeli Shekel and Mexican Peso).

CLS Settlement is the only means by which settlement risk can be eliminated with finality using a unique combination of payment versus payment in central bank funds, multilateral payment netting and a standard legal framework, supported by a robust and resilient infrastructure. 

CLS Bank is based in New York and is an Edge Corporation bank supervised by the Federal Reserve.

For further information, please visit the CLS website at www.cls-group.com

® CLS and the CLS logo are registered trademarks of CLS UK Intermediate Holdings Ltd. 

About ICAP

ICAP plc (www.icap.com) is the world's premier voice and electronic interdealer broker and the source of global market information and commentary for professionals in the international financial markets. The Group is active in the wholesale markets in interest rates, credit, commodities, foreign exchange and equity derivatives. ICAP has an average daily transaction volume in excess of US$2.3 trillion, more than 40% of which is electronic. ICAP plc was added to the FTSE 100 Index on 30 June 2006. 

About Traiana, Inc.

Traiana Inc. (www.traiana.com), an ICAP company, provides global banks, broker/dealers, buy-side firms and e-trading platforms with solutions to automate post trade processing of financial transactions. Traiana's Harmony network is used by over 50 of the world's leading financial market participants and has become the market standard for post-trade processing of foreign exchange transactions. Traiana is headquartered in New York City with offices in London and Tel Aviv.

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