This sequence of events occurred in 1974 to Bankhaus Herstatt, a small German bank. On the day of its liquidation by the German central bank, several banks with which Herstatt regularly dealt had irrevocably paid out Deutschmarks anticipating receipt of US dollars later that day. On hearing the news of Bankhaus Herstatt's collapse, Herstatt's New York correspondent bank suspended outgoing US dollar payments from the Herstatt account. CLS Services Ltd. The consortium's foremostcharge is the creation of CLS Bank, a new financial institution that will create a global continuous linked settlement system. CLS Bank is owned by more than sixty of the world's leading financial institutions and will be based in New York with operations in London.
Membership is open to institutions that meet size, soundness, legal and regulatory criteria.
Ownership is open to qualified financial institutions that meet financial size, soundness, legal and regulatory criteria. Using PVP eliminates the risk of FX settlement failure by providing a mechanism that ensures that the payments for each leg of an FX trade settle simultaneously. Timing of FX trades is simultaneous, final and irrevocable. National RTGS systems using CLS currencies will extend hours so that there is an overlap of operating hours among them so that CLS Bank settlement can complete. All FX trades will be conducted through CLS Bank by settlement members of CLS Services Ltd, each of which will have a single CLS Bank account for its participating branches and affiliated entities.