A report published by Citi earlier in April stated that uncleared margin rules (UMR) costs could seriously impact returns for FX prime brokers unless offset through pricing or other efficiencies.
Its analysis of UMR funding costs for a non-deliverable forward trade suggested that brokers have substantially underpriced transactions that will be in scope for the rules.
Traditionally, clients posted initial margin to FX prime brokers who, in turn, did not post initial margin to execution brokers, thereby creating a capital inflow.
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