On Oct. 9, the Commodity Futures Trading Commission hosted a discussion with market participants on mandatory clearing for non-deliverable forwards. The discussion revealed significant disagreement about the timing of such a mandate. While some participants emphasized that mandatory clearing could be put into effect relatively easily, others raised concerns that a clearing mandate would lead very quickly to a trading mandate, which would require U.S. market participants to use swap execution facilities for their NDF trading. They warned that this would probably lead to the fragmentation of liquidity in the NDF market and higher costs for U.S. market participants, and urged the CFTC to consider the market’s readiness before moving forward.
