What happens if an instruction remains unmatched and/or unsettled through CLS Bank?
A) If there is more than one FX trade with a single counterparty to settle in the identical currencies, then both sides should bilaterally agree to settle the trades outside of CLS Bank on a net basis.
B) If there is only one FX trade with a single counterparty to settle in the identical currencies, then either side can unilaterally decide to settle the trade outside of CLS Bank on a net basis.
C) If there is more than one FX trade with a single counterparty to settle in the identical currencies, then both sides should bilaterally agree to settle the trade outside CLS Bank on a gross basis.
D) If there is more than one FX trade with a single counterparty to settle in the identical currencies, then either side can unilaterally instruct the CLS Bank to settle the trades.

Question

Quizplus · Accepted Answer

If an instruction remains unmatched and/or unsettled through CLS Bank, both parties should bilaterally agree to settle the trades outside of CLS Bank on a gross basis when there is more than one FX trade with a single counterparty to settle in the identical currencies. This is because settling on a net basis could potentially create credit risks for both parties. Therefore, choice C is the best choice.

What Happens If an Instruction Remains Unmatched And/or Unsettled Through