CCPs face $161 billion liquidity shortfall to clear FX options, GFXD finds
Results of an industry study reveal the scale of the liquidity burden that would fall on CCPs clearing physically delivered forex options – but a net settlement mechanism could reduce the number by 73%
Central counterparties (CCPs) seeking to clear physically delivered foreign exchange options must find a mechanism to manage a same-day liquidity shortfall of as much as $161 billion, according to the results of a comprehensive industry study co-ordinated by the global forex division (GFXD) of the Global Financial Markets Association.
The publication of the data marks a major milestone in the regulatory drive towards central clearing, given the unique challenges associated with clearing foreign
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