CLS Group has completed an equity capital raise for a net amount of GBP160m, which enables it to comply with increased regulatory capital requirements, meet operational needs and establish an appropriate capital structure to benefit from future growth in the global FX market.
Launched in 2002, CLS operates the largest multi-currency cash settlement system globally to mitigate settlement risk for its shareholders, members and third-party participants in the FX market.
Since the inception of CLS, daily turnover in the global FX market has increased from USD1.2trn to USD5.3trn, according to data from the Bank for International Settlements. During this period, CLS achieved a compound annual growth rate of 31.4 per cent in average daily volume.
In April 2012, the Committee on Payment and Settlement Systems (CPSS) of the Bank for International Settlements and the Technical Committee of the International Organisation of Securities Commissions (IOSCO) issued the final version of its Principles for financial market infrastructures (PFMI). The PFMI contain new and more demanding international standards for payment and settlement systems, which are designed to ensure that the infrastructure supporting global financial markets is more robust and well placed to withstand financial shocks. The PFMI have been adopted by regulators in certain jurisdictions in which CLS is designated and are expected to be adopted in the remaining jurisdictions.
CLS has increased its capital, to meet the new capital standards in the PFMI in the expectation that they will be fully adopted.
In addition, the capital raise will enable CLS to restructure its balance sheet, invest in technology to enhance operational capability and develop new products and services for the benefit of its members and shareholders.
Gerard Hartsink, chairman of CLS, says: "We are grateful to our shareholders for their continuing support of CLS. We have a unique shareholder, membership and governance model and are delighted that shareholders globally have demonstrated their strong support for our business. With our strengthened financial position, we look forward to continuing to fulfil our mission of enhancing financial stability by providing risk mitigation services to the global FX market, for the benefit of our members and shareholders."
JP Morgan acted as financial adviser and Niederer Kraft & Frey acted as legal adviser to CLS.