Can dealers cut FX trading costs through clearing?

Published on 21 October 2022

FX trading for sell-side firms has seen rising costs as a result of regulatory friction. Uncleared margin rules (UMR) and capital requirements via the Standardised Approach for Counterparty Credit Risk (SA-CCR), are adding to the operational burden of trading. Non-deliverable forwards (NDFs) and FX options are in scope for UMR, while swaps and forwards are also caught in the calculation of capital charges.

By accessing clearing in swaps, forwards and NDFs, dealers can optimise their capital and collateral management to actively reduce the cost of trading, say Sally Francis-Cole of London Stock Exchange Group (LSEG) and Andrew Batchelor of LCH ForexClear, An LSEG Business.