Maximise your involvement in CLS by appointing as your settlement member a bank that offers a truly global, multi-currency settlement service that has demonstrated a commitment to CLS. Here are 10 steps towards a strategic involvement.
1. Select a settlement member.
Consider entering into an agreement with an experienced settlement member to help you through the complex issues surrounding CLS. This member should be prepared to work with you to explore the opportunities, features and benefits of CLS and help you get up to speed with the issues.
2. Appoint a project manager.
Entrust a project manager, probably on a part time basis, with leading the initiative internally and representing your needs in discussions with your designated settlement member. The project manager will need to form an internal working group representing a number of business functional areas including treasury, risk management, institutional banking and IT. HSBC would appoint a dedicated resource as your principal interface.
3. Undertake an internal impact analysis.
Carry out an internal impact analysis with the assistance of your prospective settlement member so that you fully understand the impact of CLS, the changes you will need to make and the costs/benefits involved, albeit at this stage at a high level.
4. Obtain internal approvals.
Obtain the necessary internal approvals including budget allocations, executive management commitment etc.
5. Decide on a start date.
Decide and agree with your prospective settlement member the date by which you intend to start using CLS. Your HSBC contact would agree with you on a project plan, including key milestones to achieve your CLS live date.
6. Contact your software supplier.
Begin a dialogue with your software suppliers to ensure that they are able to deliver the changes you require to your back-office trading settlement and messaging systems in order to:
- Identify CLS eligible trades from non-eligible trades
- Suppress payment instructions on the out leg of your eligible trades
- Suppress risk entries against your trading counterparty and raise new entries against your prospective settlement member
- Introduce new standard settlement instructions that will apply to CLS eligible trades
- Generate an input message to your prospective settlement member for all eligible trades (probably by T copy of the MT300 confirmation message)
- Implement the necessary changes to back-office structure and procedures. Test and implement changes to back-office systems
Alternatively, consider the installation of a CLS gateway 'plug and play' solution that may offer significant savings and a quicker path to going live. HSBC can provide you with introductions should this be required.
7. Conduct detailed discussions with settlement members.
Begin detailed discussions with your prospective settlement member in respect of the mechanics of using CLS including:
- SWIFT message types
- Reporting requirements
- Credit limits
- Standard settlement instructions
- Reconciliation of net pay/receive values
- Funding and disbursement arrangements
- Critical time deadlines
Negotiate a service-level agreement with your settlement member.
8. Establish a suite of accounts.
Request your settlement member to establish a suite of accounts in all eligible currencies to be used for your CLS activity.
9. Join SWIFT.
Join SWIFT as required by your prospective settlement member to enable your institution to T copy MT300s to them.
10. Conduct final testing.
Undertake final testing of all systems and procedures.
Go live:
At HSBC, we undertake a post-implementation review in order to ensure that you are satisfied with the level of service you received.
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