CIMB Thai, 1st Thai bank to use CLS for FX clearing

CIMB Thai Bank has tapped J.P. Morgan as continuous linked settlement (CLS) third party service provider. This service will enable CIMB Thai Bank, J.P. Morgan’s first CLS client in Thailand, to significantly reduce its foreign Exchange settlement risk and achieve efficient payment versus payment settlement. It will also increase trade capacity and improve operational efficiencies through a scalable solution that simplifies trade matching and reconciliation processes.

Last year, J.P. Morgan was appointed to provide Clearing facilities for CIMB’s Malaysia, Indonesia and Singapore operations. A growing regional bank, CIMB is one of Malaysia’s largest financial services companies, with more than 38,000 employees across 14 markets.

David Wee, senior executive vice president and head of group information and operations division (GIOD) of CIMB Thai Bank, says: “With J.P. Morgan’s CLS service, we have been able to significantly reduce our settlement risk and enhance the services we offer to our clients, while at the same time reducing our costs by minimizing the number of failed settlements and other post-settlement complications. Over the last year, we have been impressed with J.P. Morgan’s commitment to us as a client, so it gives us great pleasure to extend this relationship.”

Thailand currently holds $6 billion in gold reserves and is developing its domestic derivatives trading. The Thai Futures exchange reported a 90% increase in volumes in the first half of 2011. Daily average volume was 30,997 contracts and total volume reached 3.69 million contracts.