Bank of New York has filed its application to join CLS Services Ltd., a new industry organization designed to ensure cooperation in the reduction of settlement risk arising from foreign exchange transactions.

London-based CLSS was set up to create a global continuous linked settlement system. The system will be operated by a specially created CLS Bank, based in New York, which will handle all major currency foreign exchange settlements. The system is expected to dramatically reduce foreign exchange settlement exposure.

"We anticipate that CLS Bank will significantly reduce the risk of principal default on FX contracts for the bank and our clients," Thomas A. Renyi, chairman and chief executive officer of the bank, said in a release.

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