Dealers inch closer to clearing of FX forwards

Markets usually need a carrot or a stick to encourage meaningful change. For interest rate derivatives, the post-crisis reform plan that stemmed from 2009’s Group of 20 meeting became the stick that pushed swap trading onto clearing houses. 

In foreign exchange, it was thought the incoming move to a standardised approach to counterparty credit risk (SA-CCR) would do the same for deliverable FX swaps and forwards. The new regulatory framework punishes bilateral trades by imposing higher capital