FX settlement system CLS may tweak deadline to avoid US equity market rule disruption

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NEW YORK, Sept 26 - A U.S. regulatory change to stock market transactions has financial infrastructure system CLS exploring delaying settlement instructions for foreign exchange trades, a move requested by foreign asset managers who use currency trades to fund their U.S. securities transactions.

The SEC's move is aimed at reducing market risk, an area of focus since the GameStop Corp trading frenzy. CLS is assessing whether its CLSSettlement services can accommodate later submissions, he said, and is investigating whether moving its 00:00 CET deadline for submitting instructions related to FX trades for next-day settlement would allow these trades to get into the settlement session without destabilizing markets, he added.

Doing so will require regulatory engagement among other risk assessments, said CLS, which was created in 2002 to mitigate settlement risk and settles an average of $6.5 trillion a day in FX transactions, in a market where more than $7.5 trillion changes hands daily.

 

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