HUF became a CLS settlement currency

UniCredit Bank Hungary Zrt.
Thu, 03/12/2015

As a result of an almost two year on-boarding procedure, CLS settlement in HUF started on 16 November. It is the 18th CLS settlement currency.                                   

The Hungarian Forint (HUF) the first among the Central and Eastern European currencies to join the CLS settlement system. As CLS provides its services in multiple countries, under various legal systems, it is under a so-called international co-operative supervision by the central banks of the CLS settlement currencies, now including the Central Bank of Hungary (CBH).

Maintaining and strengthening the stability of the financial system in Hungary is one of the principal tasks of the CBH. Smooth operation of the payment system is a critical part of the financial system; therefore the CBH puts a great emphasis on assessing and mitigating the related risk. According to the analysis of the CBH, settlement risk lasts for a few hours when HUF is the buy currency, while more than 20 hours if HUF is the sell currency.

By introducing the HUF as a CLS settlement currency the CBH aims at strengthening the financial stability of Hungary.

Providing CLS HUF nostro agent service is a new business opportunity for the local banks, mainly those which are already engaged in providing regular HUF nostro account services. Settlement members of the CLS can only conclude settlements in HUF if they have a CLS HUF nostro account with a local cash clearing member.

UniCredit Bank Hungary, being a major player of the local market in respect of HUF nostro account services as well as custodian services, recognised at a very early stage how important the CLS settlement is for the active foreign exchange market participants.

Through leveraging on the bank’s existing experience in providing nostro services and on its liquidity capabilities, the bank achieved a market leader position in CLS HUF nostro agent services by servicing five settlement members out of the eleven “Day 1 Participants”.

Gabriella Kopházi-Tóth
Senior Relationship Manager
Global Securities ServicesHungary