London, New York, Singapore - NEX Optimisation has provided central clearing connectivity for its FX risk mitigation service in non-deliverable forwards. The clearing connectivity capability enables dealers to flag trades that are part of a risk mitigation cycle for automatic submission to a central counterparty clearing house (CCP).
Clients of the Reset FX risk mitigation service now have direct connectivity to CCPs allowing trades matched between two counterparties to be submitted directly for clearing rather than having to be re-submitted for secondary matching prior to communication to a CCP.
Currently, the majority of centrally cleared FX transactions are executed on electronic venues or represent the component trades of a risk reduction cycle. These trades are executed/processed across multiple venues and are then submitted for clearing on a voluntary basis as part of a two-step process.
NEX Optimisation has provided clearing connectivity for the risk mitigation service, following consultation with FX market participants, including dealers, clients, execution venues and clearing members, who wished to establish a clearing process that mirrored the operational practices established for swaps under the Dodd-Frank Wall Street Reform and Consumer Protection Act.