Continuous Linked Settlement System

CLS is a global multi-currency settlement system that aims to eliminate foreign exchange (FX) settlement risk due to time-zone differences.  The CLS settlement service, provided by CLS Bank, allows both legs of a FX trade submitted by members to be settled simultaneously across the books of CLS Bank and therefore guarantees finality and irrevocability of the settlements.

CLS went live in September 2002 and initially settled FX transactions in seven major currencies - the Australian Dollar, Canadian Dollar, Euro, Japanese Yen, Pound Sterling, Swiss Franc and US Dollar.  The Singapore Dollar (SGD) was included in CLS in September 2003, together with the Danish Krone, Norwegian Krone and Swedish Krona.  As a result, FX trades involving SGD and other CLS currencies can be settled in CLS without exposure to FX settlement risks.
Three local banks - DBS Bank Ltd, Oversea-Chinese Banking Corporation Ltd and United Overseas Bank Ltd, who are CLS shareholders - started settling their eligible FX trades through CLS Bank in December 2002.  For efficiency, the three banks have established Clearing & Payment Services Pte Ltd (CAPS), a common clearing utility, to process their CLS transactions.

CLS is regulated and supervised by the Federal Reserve in the U.S. as an Edge corporation.  The U.S. Federal Reserve also chairs the CLS Oversight Committee (“OC”), in which MAS participates along with other central banks.  The CLS OC provides a mechanism for central banks whose currencies are settled in CLS to carry out their individual oversight responsibilities.  The U.S. Federal Reserve organizes and administers the CLS OC, which operates in accordance with the Protocol for Cooperative Oversight of CLS (“Protocol”).  The Protocol was adopted by the CLS OC to avoid duplication of effort by the central banks, foster consistent, transparent communications between the central banks and CLS, and enhance transparency among the participating central banks regarding the development and implication of international and domestic policies applicable to CLS.
For more information on the Protocol, please click the links below.

CLS is a designated payment system under the Payment and Settlement Systems (Finality and Netting) Act.

Last Modified on 26/11/2016