The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.

All material subject to strictly enforced copyright laws. © 2022 Euromoney, a part of the Euromoney Institutional Investor PLC.

Foreign exchange: No clarity on clearing

As foreign exchange finds itself under the same legislative spotlight as other asset classes, it looks as if only options and non-deliverable forwards (NDFs) will be have to be cleared through a central counterparty (CCP) in the US. But such legislation might prove very difficult to enforce.

Most banks are keeping quiet on the matter, given the sensitivities around the taxpayer support they have received. However, mandated clearing of a global product through for-profit entities such as CME Clearing, which are also not multinational, is starting to look increasingly unrealistic. Of course, the legislators and regulators cannot be ignored, but will the European Central Bank, the Bank of Japan or the Bank of England really allow their currencies to be cleared exclusively through a US-based clearing house?

The CME is growing its FX business at a faster pace than its rival over-the-counter platforms, so it should be questioned whether mandated clearing is really necessary. Derek Sammann, managing director financial products and services at CME, says the mitigation of counterparty risk achieved by the use of a CCP is a big reason why. The fact that the CME has seen a good increase in its exchange-for-physical (EFP) business – as has ICE – supports this claim.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.


Unlimited access to and

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually


Unlimited access to and, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors


Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree