FX forwards users drop EU banks over margin rule
Other dealers do not have to collect margin on physically settled forwards
European banks are being cut from counterparty lists for some foreign clients, a result of rules that would force the dealers to collect variation margin (VM) on currency forwards. Banks in other jurisdictions will be able to continue trading the products without margin after the rules take effect in the European Union in January next year.
“What we are doing now is taking EU banks off the bank
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