5.2 CLS Eligibility check at the Pre- Settlement Manager

This topic describes the overview of CLS Eligibility check at the Pre- Settlement Manager.

In Pre- Settlement layer, eligibility to apply CLS Instructions is decide by the below three level validations

First Level Validations

• The branch is identified as a ‘CLS Participant’.
• The sold and bought currencies are identified as ‘CLS currencies’.
• The CLS currency details are maintained for the Branch + Bought Currency and Branch + Sold Currency combinations.
• The customer of the contract is a CLS participant who is allowed to deal in both the bought and sold CLS currencies.
• The value date of the contract should be a working day for both the currencies as per the Currency Holiday Calendar and the CLS Bank Holiday Calendar.

The following validations is performed for CLS Settlement Instructions:

• The module is ‘FS’.
• The product is a specific FX product.
• The currency is a ‘CLS Currency’.
• The counterparty is a ‘CLS Participant’.

If the first level check fails, the contract will not qualify to be processed as a CLS deal and will be saved as non-CLS (the ‘CLS Eligible’ option will remain unchecked). The system will process the deal with module as ‘FX’

Second Level Check

The second level check is performed only if the first level check is successful.

The below mandatory maintenance has to be done for the second level check:

• BIC of the Counterparty has to be maintained in the BIC Code Details screen.
• Settlement Member has to be as maintained in the ‘FX Branch Parameters – CLS Preferences’ screen.
• BIC of the CLS Bank has to be maintained in the CLS Bank Directory (for CLS Participant Type ‘CLS Bank’).

Third level validations

The third level check will be performed only if the first and second levels checks are successful.

As part of this check, for trades done on the trade cut-off date, the system will verify the trade cut-off times defined for both the bought and sold currencies of the deal and consider the earlier of the two as the actual cut-off time for the deal. If the third level check is not satisfied.