Nomura Asset Management has become the first Japanese-based investment manager to provide access to CLSSettlement, a foreign exchange (FX) settlement platform, for locally-domiciled funds.
The asset manager is working with three trust banks – Nomura Trust and Banking (NMTB), Japan Trustee Services Bank (JTSB), and The Master Trust Bank of Japan (MTBJ) – to provide access for 21 Japanese-domiciled investment trust funds.
Nomura Asset Management and the trust banks are supported by a number of global custodians, including Brown Brothers Harriman, Citi and Sumitomo Mitsui Trust Bank (USA).
The introduction of Japanese funds onto the FX settlement service follows a multi-year effort to onboard the Japanese buy-side community to CLSSettlement.
Japan’s markets regulator, the Financial Services Agency (FSA), has sought to promote payment-verses-payment (PvP) settlement and netting for FX market participants, and assist the industry in adopting CLSSettlement.
“We are managing a wide range of funds and trading foreign exchange with both domestic and foreign counterparties. We need to mitigate settlement risk, and think that CLS is effective in that respect. We are preparing to further expand CLS settlement in the future,” said Kunihisa Ono, managing director, Nomura Asset Management.
In August last year, CLS onboarded its first Japanese-domiciled funds to the settlement platform, conducted between Fidelity International and MTBJ.
“There is increasing appetite amongst our buy-side clients to mitigate settlement and operational risk and we are pleased to be able to support our clients in achieving this as a major direct CLS participant since its establishment,” added Toshikatsu Furumi, head of prime, future, securities services in Citi Japan.Since early 2017, CLS has seen a rise in settlement activity from third-party participants including its first Japanese institutional investor, first corporate institution as well as the first Korean fund participants in CLSSettlement. Third-party participation globally accounts for approximately 22% of the total value settled in CLS.