FX market lags behind IRS and credit derivative markets in post trade systems
Hill, director and head of FX trade processing at Markit
The delays in enacting regulatory mandates for
central clearing of FX derivatives highlight an interesting
trend—even though clearing remains optional, the
industry continues to increase the level of activity booked
through central clearing counterparties (CCPs). Market
participants should continue to prepare for the day when
clearing becomes the norm.
Earlier this year, the European Securities and
Markets Authority (ESMA) backed away from its timeline for
mandating the clearing of non-deliverable forwards (NDFs). It
has not, however, completely ruled out such a move in the
future and indicated in February that it is assessing the
concerns raised by the industry during last year’s
consultation period on FX derivatives clearing. Similarly, the
US Commodity Futures Trading Commission (CFTC) proposed rules
for clearing NDFs in 2013, but has gone quiet following
consideration by its global markets advisory committee in late
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