Choosing a Settlement Member in the CLS Era

Continuous linked settlement (CLS) is a relatively new clearing system technique for Asian banks, as the original seven currencies, and hence participants, were largely European and North American.

By Y. S. Wong and David Yau

December 18, 2003

CLS' popularity in Asia is expected to increase with the inclusion of the Singapore and Hong Kong dollars in 2003 and 2004, respectively.
This case study examines how Dah Sing Bank DSB, as a third-party participant, came to choose HSBC as its CLS settlement member.
DSB's comparison of potential settlement members was not limited to the traditional criteria such as system requirements and pricing, as these factors were found to be similar among settlement members' third-party participant service proposals rather, DSB expanded its examination to include the quality of pre- and post-implementation support, the degree of data confidentiality and the timeliness of real-time information access.

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