CLS, the
financial market infrastructure group that runs the largest
payment-versus-payment settlement system for foreign exchange, appointed six
new members to its board of directors.
The new
directors are James Hardy, an independent director, Richard James of Deutsche
Bank, Sandra Laielli van Scherpenzeel of UBS Switzerland AG, Matthieu Mercier
of BNP Paribas CIB, Chadwick Renfro, an independent director, and Boyd Winston
of JPMorgan Chase Bank.
With the
additions, the CLS board now has 21 directors, eight of them
designated as outside or independent.
Board Chairman
Gottfried Leibbrandt linked the new directors’ expertise to the company’s risk
agenda.
[#highlighted-links#]
“Settlement
risk remains a key focus for the FX industry,” he said, adding that the
appointees’ backgrounds in information security, operational resilience and
risk management would support the firm’s work across the global FX system.
A Board Tilting Toward
Security and Resilience
Half of the
new appointees come from security and operational-resilience roles rather than
front-office trading.
Hardy is
the former chief resilience officer and executive vice president at State
Street, where he spent more than two decades and represented the bank at
industry bodies including SIFMA and the Global Financial Markets Association.
Mercier is
global chief information security officer and head of operational resilience at
BNP Paribas CIB, a role focused on cybersecurity, IT risk and conduct
frameworks.
Renfro
previously served as chief information security officer at both Bank of America
and Fidelity Investments, overseeing more than 1,200 security staff at the
former.
The
remaining three bring FX and markets operations experience. James runs FX
digital distribution at Deutsche Bank, Laielli van Scherpenzeel leads cash
banks and institutional banking at UBS Switzerland, and Winston oversees global
macro operations and EMEA operations at JPMorgan.
Why Settlement Risk Still
Drives CLS
CLS settles
trades in 18 currencies and processes trillions of dollars in payment
instructions on a typical day, using a payment-versus-payment model that
releases one currency leg only when the other is received.
The
mechanism is designed to remove the risk that a counterparty pays out but never
gets paid back, a vulnerability exposed by the 1974 collapse of Germany’s
Herstatt Bank.
The
settlement-risk problem has not gone away. The Bank for International
Settlements has repeatedly flagged that a meaningful share of daily FX turnover
still settles without PvP protection, particularly in emerging-market
currencies that CLS does not cover.
That gap
has driven demand for the firm’s bilateral netting tool, with global banks adopting CLSNet as regulators pressed the industry
on the issue.
Volumes
have set records along the way. CLS settled $19.1 trillion in a single
day at one point,
surpassing a previous high of $16.3 trillion.
The company
has also extended its model beyond spot settlement, launching a PvP service for cleared FX
derivatives as it
looks to widen the share of the market running through its rails.
A Bank-Heavy Bench
The new
slate reflects CLS’s ownership structure, which is held by the major dealing
banks that use its system. F
our of the
six appointees hold senior roles at Deutsche Bank, UBS, BNP Paribas and
JPMorgan, while the two independent directors carry resilience and
cybersecurity track records.
CLS is
owned and governed by its member banks, an arrangement that gives the largest
FX dealers direct representation on the board overseeing the infrastructure
they depend on.
The firm
describes itself as created by the market for the market, and its director
appointments are voted on by shareholders at the annual meeting.
The
appointments add to a steady reshaping of the CLS board in recent years as the
utility expands its services and faces growing regulatory attention on
operational and cyber resilience across market infrastructure.
This article was written by Damian Chmiel at www.financemagnates.com.
Source link
