CLS Group, a risk mitigation and operational services provider for the global FX market, revealed today that it has started settling payment instructions in the Hungarian forint (HUF) for its service members. This makes the forint the 18th currency eligible for settlement on its system.
David Puth, CEO of CLS, commented: “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 Magyar Nemzeti Bank (MNB), Hungary’s central bank, is said by CLS to have sought to enhance financial stability in the Hungarian market by making the HUF eligible for settlement. The group further explains that, while adding a new currency to the platform is a major endeavour, involving extensive preparation and testing, the project was completed in less than two years as a result of close cooperation between the two parties.
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Dr. György Matolcsy, Governor of MNB, added: “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.”
This move comes as the group works consistently to increase its reach into emerging economies. Last week, CLS announced that FirstRand, one of South Africa’s largest banking groups, joined the ranks of its settlement members.