The CLS System is a mechanism for payment-versus-payment (PVP) real-time settlement of payments associated with foreign exchange transactions, replacing the existing multiday settlement process with a daily 5-hour 'time window' during which trade funding, settlement, and payment are executed. While the system is a back-office mechanism for processing the payments associated with foreign exchange transactions among banks, its implementation has already had a significant impact on both pre- and postsettlement functions and metrics in other areas of banks' foreign exchange functions, such as treasury services, credit operations, and FX operations.
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