Forex options clearing complicated by guaranteed settlement requirements

CPSS-Iosco guaranteed settlement requirements make foreign exchange options clearing more difficult, say participants

Industry efforts to clear foreign exchange options have been dealt a heavy blow by a proposed regulatory requirement for central counterparties (CCPs) clearing these instruments to have sufficient liquidity to guarantee the full and final settlement of all obligations – a requirement that goes far beyond what is offered by existing market infrastructure.

In a set of proposed principles for financial market infrastructures, published in March by the Committee on Payment and Settlement Systems and