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ABP in foreign exchange settlement move

NETHERLANDS – Stichting Pensioenfonds ABP has joined a system aimed at reducing the risk involved in foreign exchange settlements called continuous linked settlement.

The civil service scheme, joins 484 other banks, non-bank financial institutions, companies and investment funds on the system, which is owned by 71 of the world’s largest financial groups.

“CLS eliminates settlement risk, improves liquidity management, reduces operational banking costs and improves operational efficiency and effectiveness,” the outfit says on its web site.

ABP has joined the system as a third party of Dutch bank ABN Amro and is one of the first non-bank institutions to join.

ABN Amro said the system provides institutions like ABP with “efficiencies and settlement rates that were previously available only to banks”.

It quoted ABP Investments’ general manager of operations, Peter Sporken, as saying: “CLS will make a major difference to our business by eliminating risk for our significant volume of FX transactions, while at the same time increasing operational efficiency.”

Carel Schmidt, executive director for global markets at the bank, said: “The benefits of CLS for non-bank financial institutions are compelling and we believe this market segment will grow quickly.”

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