Frances Maguire
Frances Maguire

From banks to the buy-side - FX Clearing brings risk mitigation to the wider market

The impact of clearing will be felt throughout the FX market. Frances Maguire looks at the main challenges ahead and what’s in store.

Clearing for FX has been a topic of debate for quite some time, and it will soon be kick started  in the US, when product definition rules are released detailing which products are classified as derivatives or swaps and therefore subject to clearing mandates. The US Treasury has proposed exempting FX forwards and swaps from the definition of a swap, and therefore from the clearing obligation and this is a move that James Kemp, Managing Director of the Global FX division of the Global Financial Market Association (GFMA), the industry body of the FX market, would like to see finalised to bring greater clarity to the market. He says: “There is a very big drive for international convergence from the next group of jurisdictions looking to put their own legislation in place, so finalisation of the decision will allow the industry to move forward.” In Europe, the finalised European Market Infrastructure Regulation (EMIR) identifies that there could be products, such as foreign exchange, where...continued

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