Additional forint margin required on FX swap transactions providing euro liquidity will be reduced
By reducing the additional forint margin required on FX swap transactions providing euro liquidity from 10 per cent to 5 per cent as well as by conducting its operations on margin accounts related to the daily revaluation of transactions symmetrically, the Magyar Nemzeti Bank intends to provide domestic credit institutions with easier access to its instruments providing euro liquidity.
In the changing global financial market environment, the Magyar Nemzeti Bank seeks to help domestic credit institutions manage their liquidity using the instruments at its disposal. To this end, from 14 April 2009 the Bank will reduce from 10 per cent to 5 per cent the amount of additional forint margin required on its FX swap transactions providing euro liquidity.
Also from 14 April 2009, in conducting FX swap transactions providing euro liquidity, the 5 per cent additional forint margin will not be incorporated in the starting EUR/HUF exchange rate of FX swap transactions. With this modification, the initial EUR/HUF exchange rate used in the starting leg of the Bank’s FX swap transactions will be equal to the prevailing EUR/HUF market exchange rate, and the Bank will debit the Counterparty’ settlement account at the Bank by the amount of the additional 5 per cent forint margin and will credit the same amount to the margin account of the Counterparty on the day a transaction occurs.
In addition, from 11 May 2009 the Bank will make its margin account operations related to the daily revaluation of FX swap transactions providing euro liquidity symmetrical. This means that if the margin available for the Bank in respect of longer-term (i.e. three and six-month) FX swap transactions providing euro liquidity exceeds the required 5 per cent due to a strengthening of the forint against the euro, the Bank will release the forint amount equal to the amount of excess margin posted by a Counterparty under the transaction and will credit to the Counterparty’s settlement account at the Bank. Consequently, in the future it may not happen that Counterparties of the Bank are unable to release a justifiable portion of forint liquidity posted under the Bank’s FX swap transactions, even if the Bank is left with excess margin due to a strengthening of the forint against the euro.
The detailed conditions for participating in FX swap instruments providing euro liquidity are available at:
http://english.mnb.hu/engine.aspx?page=mnben_eszkoztar_tenderek
MAGYAR NEMZETI BANK
the central bank of Hungary