First Abu Dhabi Bank (FAB) has signed a testing and trialing agreement with CLS for its confirmation, matching and netting service ‘CLSNet’.
FAB, which has marked another regional first through this agreement, will be able to automate and standardise the netting calculation and reconciliation process with counterparties by using CLSNet, thereby increasing efficiencies and reducing potential operational discrepancies.
Netting – which offsets receivables against payments due and therefore reduces net payments and saves transaction costs – minimises FAB’s exposure with counterparties through reduced settlement notionals and subsequently improves credit line efficiencies. In the FX Global Code, netting is recommended to manage counterparty risk and reduce settlement risk.
Anan Samaneh, SVP & Head of FXMM & Control Operations, FAB, said: “This agreement with CLS highlights FAB’s importance as a leader in the global FX market. Being the first mover in the Middle East showcases FAB’s commitment to embrace innovation, particularly as a specialist in emerging markets. We hope our vision to constantly grow stronger will spur other organisations in the region to similarly participate in this netting and confirmations system and improve standards across the board.”
Keith Tippell, Head of Product, CLS, commented: “The addition of FAB demonstrates the appeal of CLSNet to FX market participants trading in emerging market currencies. Given the sharp focus on settlement risk mitigation across the industry, CLS is investing further in evolving CLSNet to ensure broad-based adoption and, additionally, exploring new functionality related to liquidity optimisation and payment certainty.”