Assistance with integrating CLS services to settle FX Trades due to the need to comply with United Kingdom Regulations
New Link assisted in establishing a Continuous Linked Settlement membership so that a newly ring-fenced investment bank entity could settle their FX trades.
Problem Statement:
New Link Consulting engaged with the client (a Tier 2 UK Bank) to assist with their segregation of its retail bank from their investment banking arm as they were required by UK regulations to form a separate ring-fenced entity. This entity required its own treasury function so that it could manage its liquidity requirements for when it settled. Thus, it needed to have CLS (Continuous Linked Settlement) membership so that it could settle FX trades.
This requirement led to the client facing some key challenges; The newly formed treasury and operations line team had limited knowledge about CLS. Several assumptions were made on supplementary CLS services that needed to be validated. With this limited knowledge, there was a lack of clarity on roles and responsibilities as well as the TOM (target operating model).
The low clarity in the organisation resulted in standard project governance not being adhered to across the new programme and thus affected the timeframe to begin testing.
NLC Engagement:
New Link assisted by hosting workshops to teach key stakeholders on the functionality of CLS including its many facets; the various solutions of liquidity optimisation, failure scenarios, regular testing methodology, supplementary CLS offerings and best practices.
The team also aided in developing a framework that assisted in identifying the entity’s priorities and capabilities so that it could validate the assumptions that had been made regarding supplementary CLS services.
Throughout the project, the client was aided by programme management support in case it was required.
Outcome:
Due to the knowledge and experience gained from the training, a comprehensive understanding of internal CLS was achieved.
The workshops organised for the key stakeholders that were created to validate the assumptions on CLS, achieved their outcome. Supplementary services were validated and agreed key focus areas were go live.
New Link assisted in defining and implementing an operating model for when the client began CLS operations.
To help organise and structure the project, a programme plan and a project reporting framework were introduced and followed closely throughout the programme.
The team also worked with the legal, IT front office and operations teams to ensure that the programme plan was being followed and that each phase and key tasks would be completed as structured to make ready for CLS testing to begin.
