LCH Clear to launch NDF clearing in November
- LCH.Clearnet plans to launch its widely anticipated foreign exchange clearing platform for non-deliverable forwards (NDFs) in mid-November. The new clearing service, dubbed ForexClear, has been in development since late 2010. LCH.Clearnet declined to comment for this article, but it is understood the platform will launch with NDFs covering six currencies against the US dollar: Chinese Yuan, Brazilian Real, Indian Rupee, Russian Ruble, Korean won and Chilean peso.
LCH.Clearnet plans to launch its widely anticipated foreign exchange clearing platform for non-deliverable forwards (NDFs) in mid-November.
The new clearing service, dubbed ForexClear, has been in development since late 2010. LCH.Clearnet declined to comment for this article, but it is understood the platform will launch with NDFs covering six currencies against the US dollar: Chinese Yuan, Brazilian Real, Indian Rupee, Russian Ruble, Korean won and Chilean peso.
While it had initially been expected to cover Forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Read this Term options and NDFs, the Clearing House Clearing House A clearing house is defined as an intermediary between two parties, a buyer and seller, which helps facilitate the overall process from trade inception to settlement. Clearing houses streamline the exchange of payments, securities, or derivatives transactions.The clearing house is situated between two clearing firms who also helps reduce the risk of either member firm failing to honor their respective trade settlement obligations.Buyers and sellers enter into legally binding agreements for the e A clearing house is defined as an intermediary between two parties, a buyer and seller, which helps facilitate the overall process from trade inception to settlement. Clearing houses streamline the exchange of payments, securities, or derivatives transactions.The clearing house is situated between two clearing firms who also helps reduce the risk of either member firm failing to honor their respective trade settlement obligations.Buyers and sellers enter into legally binding agreements for the e Read this Term is understood to have temporarily shelved options pending discussions that were initiated in June between the US Federal Reserve and the major banks about the management of settlement risk for options.
The Dodd Frank rulings have put all emphasis on NDF's as the exact rulings on Options are not clear. New Swap Execution Facilities will be acting as clearers for OTC products.
Current daily NDF volumes are insignificant compared to traditional FX products, accounting for some 3% of daily FX volumes. Although, global trade volumes have risen dramatically in recent years, it has been estimated (by NY Fed) that somewhere between 60-80% of NDF volume is based on speculative trades, rather than commercial hedging.
As the name implies, the NDF currencies are not physically delivered, instead the contract is cash ‘net settled’ by calculating the difference between the agreed upon (forward) exchange rate at the time the NDF was taken out, and the subsequent spot fixing rate, which for most NDFs will be 2 days before the forward value date. One party in the agreement will then make a payment to the other party on the basis of the profit or loss on the contract (in the deliverable ‘other currency’ against which the NDF was quoted).
NDFs are mostly, quoted and settled in US dollars, but can be quoted in other liquid currencies such EUR, GBP, JPY, CHF, CAD etc.
NDF's are still traditionally traded products and the majority of transactions are processed via voice broking around 46% of current volumes. The market is moving closer to e-trading with platforms such as FXALL and many single dealer bank platforms.
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LCH.Clearnet plans to launch its widely anticipated foreign exchange clearing platform for non-deliverable forwards (NDFs) in mid-November.
The new clearing service, dubbed ForexClear, has been in development since late 2010. LCH.Clearnet declined to comment for this article, but it is understood the platform will launch with NDFs covering six currencies against the US dollar: Chinese Yuan, Brazilian Real, Indian Rupee, Russian Ruble, Korean won and Chilean peso.
While it had initially been expected to cover Forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Read this Term options and NDFs, the Clearing House Clearing House A clearing house is defined as an intermediary between two parties, a buyer and seller, which helps facilitate the overall process from trade inception to settlement. Clearing houses streamline the exchange of payments, securities, or derivatives transactions.The clearing house is situated between two clearing firms who also helps reduce the risk of either member firm failing to honor their respective trade settlement obligations.Buyers and sellers enter into legally binding agreements for the e A clearing house is defined as an intermediary between two parties, a buyer and seller, which helps facilitate the overall process from trade inception to settlement. Clearing houses streamline the exchange of payments, securities, or derivatives transactions.The clearing house is situated between two clearing firms who also helps reduce the risk of either member firm failing to honor their respective trade settlement obligations.Buyers and sellers enter into legally binding agreements for the e Read this Term is understood to have temporarily shelved options pending discussions that were initiated in June between the US Federal Reserve and the major banks about the management of settlement risk for options.
The Dodd Frank rulings have put all emphasis on NDF's as the exact rulings on Options are not clear. New Swap Execution Facilities will be acting as clearers for OTC products.
Current daily NDF volumes are insignificant compared to traditional FX products, accounting for some 3% of daily FX volumes. Although, global trade volumes have risen dramatically in recent years, it has been estimated (by NY Fed) that somewhere between 60-80% of NDF volume is based on speculative trades, rather than commercial hedging.
As the name implies, the NDF currencies are not physically delivered, instead the contract is cash ‘net settled’ by calculating the difference between the agreed upon (forward) exchange rate at the time the NDF was taken out, and the subsequent spot fixing rate, which for most NDFs will be 2 days before the forward value date. One party in the agreement will then make a payment to the other party on the basis of the profit or loss on the contract (in the deliverable ‘other currency’ against which the NDF was quoted).
NDFs are mostly, quoted and settled in US dollars, but can be quoted in other liquid currencies such EUR, GBP, JPY, CHF, CAD etc.
NDF's are still traditionally traded products and the majority of transactions are processed via voice broking around 46% of current volumes. The market is moving closer to e-trading with platforms such as FXALL and many single dealer bank platforms.