News Release
Foreign Exchange Settlement Risk
30 September 1997
The Bank of England welcomes the progress made by CLS Services, ECHO and Multinet(¹) in agreeing terms for a merger, subject to regulatory ap proval(²). This is a positive step towards achieving one of the goals set out in the G-10 report on reducing FX settlement risk, which called for collective industry solutions to reduce risk(³). G-10 central banks, including the Bank of England, and regulators will be working with all three settlement institutions on the detailed plans for further development of the systems. Next summer, as part of the two-year strategy set out in its report, the G-10 will review progress overall in reducing FX settlement risk, including the progress made by individual banks in monitoring and containing their individual exposures (4).
Notes for Editors
CLS Services Ltd., Exchange Clearing House Ltd., and Multinet International Bank. [The chairmen of these three institutions have today issued a press notice announcing agreement on proposed terms for a merger of their institutions.]
The proposed change of ownership of ECHO and Multinet requires the approval of regulators in the UK and the US.
"Settlement Risk in Foreign Exchange Transactions" Report prepared by the Committee on Payment and Settlement Systems of the central banks of the Group of Ten countries, March 1996. Available from the Bank for International Settlements and also from the Bank of England (+44 (0) 171 601 3243).
The report proposed a three-track strategy to address the systemic risks associated with FX settlements comprising
- action by individual banks to control their foreign exchange settlement exposures
- action by industry groups to provide risk-reducing multi-currency services
- action by central banks to induce rapid private sector progress
