Watch FX Week's live webinar on the challenges and implications of mandatory clearing for the FX market, first screened on April 18
On April 18, FX Week gathered together a senior panel of experts for a live webinar to discuss the topic New rules, new plumbing: How the FX market must adapt to clearing.
To watch the webinar again, click here.
Moderator: Joel Clark, Editor, FX WEEK
Although new regulations for over-the-counter derivatives will affect only a small portion of the FX market, the changes in processing and workflow that will be required for compliance look certain to be significant. After many months of preparation, change has started to become evident in recent weeks, as central clearing of non-deliverable forwards (NDFs) has kicked off, and middleware providers have unveiled new offerings to provide the necessary connectivity between banks, clearing houses and the buy side.
As attention turns to the launch of client clearing later this year, and the looming end-of-2012 compliance deadline set by the G-20, this group of senior market participants discussed the important changes taking place, and what the industry needs to do to prepare.
– At the moment it appears that both FX options and NDFs will be required to be centrally cleared under new regulation. How exactly does that translate into operational requirements for banks and buy-side firms?
– For buy-side firms and smaller banks, it is unlikely to make economic sense to become direct members of CCPs, which means they will have to use the client clearing services of the larger banks. What will be the key components of those client clearing models, and how will they differentiate themselves from one another?
– Installing CCPs into the FX market will make the post-trade environment considerably more complicated. What will market participants need to do to navigate that complexity when trading options and NDFs, and what will be the biggest challenges?
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