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CLS to launch CNH PvP settlement service

Created at 16 Jul · 3:36 AM1 source↑ Market-relevant
IN SHORT

CLS is planning to introduce a payment-versus-payment (PvP) settlement service for the offshore Chinese renminbi (CNH). This move aims to mitigate foreign exchange settlement risk amid the CNH's growing global financial and cross-border transaction roles.

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Who's Involved

CLS
planning to launch a payment-versus-payment (PvP) settlement service for CNH

↳ Why This Matters

The introduction of a PvP settlement service for CNH will reduce settlement risk for financial institutions trading the currency, potentially increasing its liquidity and facilitating greater global adoption.

Key facts

  • CLS is developing a payment-versus-payment (PvP) settlement service for the offshore Chinese renminbi (CNH).
  • The service will facilitate settlements in Hong Kong.
  • The launch is driven by increasing demand to reduce foreign exchange settlement risk.

CLS, a provider of settlement services, is preparing to introduce a payment-versus-payment (PvP) settlement service for the offshore Chinese renminbi (CNH). This development, understood by Risk.net, is a response to the growing need to mitigate foreign exchange settlement risk. The CNH's expanding role in global financial markets and cross-border transactions has fueled this demand. The planned service will involve settling the offshore renminbi in Hong Kong through a dedicated PvP session.

Frequently asked questions

A PvP settlement service ensures that the final transfer of one currency occurs if and only if the final transfer of the other currency also occurs. This eliminates settlement risk.

CNH refers to the Chinese renminbi traded outside mainland China. It is distinct from the onshore renminbi (CNY) and is subject to different regulations.

As the CNH's use in global trade and finance grows, reducing the risk that one party in a transaction defaults after the other has fulfilled its obligation becomes crucial for market stability and confidence.

What Happens Next

01CLS to finalize and launch the CNH PvP settlement service.

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How It Developed

CLS plans to launch a payment-versus-payment (PvP) settlement service for the offshore Chinese renminbi (CNH).
The service will involve settling offshore renminbi in Hong Kong via a separate PvP session.
This expansion addresses growing demand to limit foreign exchange settlement risk due to the CNH's increasing role in global markets.

Sources

T1
CLS to launch CNH PvP settlement serviceRisk.net

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