CLS adds Hungarian forint to settlement system
CLS Group (CLS), a leading provider of risk mitigation and operational services for the global foreign exchange (FX) market, has begun settling payment instructions in Hungarian forints (HUF) on behalf of its settlement members, bringing the total number of currencies eligible for settlement through CLS to 18, an announcement issued today reveals.
The National Bank of Hungary (MNB) sought to enhance financial stability in the Hungarian market by making its currency, the HUF, eligible for CLS settlement, the announcement says. Hungary recognized that a partnership with CLS would reduce settlement risk among banks trading the HUF and would strengthen the overall stability of the Hungarian financial system, the press release says.
“We are very pleased to welcome the Hungarian forint onto the CLS system. While already one of the world’s top 25 most active currencies, we believe that the forint is a currency with significant growth potential. From the outset of this process, it was very clear that there was appetite from both regulators and market participants to settle the forint through CLS. We look forward to continuing to work with the central bank and our existing clients to expand participation of both local and foreign institutions in the Hungarian market. The addition of another currency to CLS, combined with the continued growth in participation, is a positive endorsement of our model. We strongly believe settling a currency through CLS enables counterparties to gain significant benefits, including reduced settlement risk, greater cost control and access to a global network of trusted counterparties,” David Puth, CEO of CLS, said.
“We wholeheartedly welcome this successful collaboration with CLS. Approximately 90% of trading in the Hungarian forint takes place internationally, so it was important for us that it became eligible for CLS settlement. The CLS model provides a proven and trusted model for safe and efficient settlement of FX transactions and reducing settlement risk will reinforce the stability of our financial system and benefit the wider economy,” György Matolcsy, Governor of MNB, said.
Reuters reported on October 26 that the Hungarian forint could be the first currency in the CEE to join the CLS settlement system in the next few weeks.
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