Asia to follow US on clearing amid fears about hedging costs for exporters

Asian banks likely to opt for harmonised OTC clearing approach with the US and expect higher hedging costs for corporates

Banks in Asia say there is no easy formula in deciding whether moving over-the-counter foreign exchange instruments onto central counterparty (CCP) clearing would represent a lower-cost solution for their corporate clients, or if they are better off falling back to the traditional practice of using a credit support annex (CSA) under International Swaps and Derivatives Association master agreements.

In Asia, G-20 member countries such as Australia, China and Japan, are expected to largely follow