19:19 Jan 20, 2022
CCILCCIL > Risk Management > CLS Segment

Risk Management Process



CCIL settles the CLS trades of its members by becoming a third party settlement agency to UBS Switzerland AG. To take care of the risks arising out of this arrangement, Settlement Banks usually set limits for all entities settling through them.

To take care of such risks, Settlement Banks usually set limits for all entities settling through them. As a settlement agency, CCIL does not take any clean exposure on its members. Risk management processes at CCIL are therefore designed in such a way that CCIL’s exposure on a member on account of the outstanding CLS trades of the member is covered through collateral or bank guarantees. The risk is monitored by setting Exposure Limits for members, which are arrived at on the basis of the collaterals deposited.


CCIL sets two types of limits for a member (both denominated in US Dollars).
i) Base CLS Limit – Minimum limit for each settlement date
ii) Additional CLS Limit - Only for specified settlement date


Total Limit for a member for a settlement date is equal to the sum of the Base CLS Limit and the Additional CLS Limit. Exposure Limit utilization monitoring is on-line and system driven. A member’s exposure in any currency is marked to market daily and is further adjusted for the currency fluctuation factor by way of a distinct hair-cut rate for each currency.
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