Legacy booking models impede NDF clearing, banks say

Novation lag holds up clearing of forex products; some say dealers are dragging feet

Photo of ticket barrier
Barrier to entry: trade booking problems for NDFs

A blind spot in the trade booking systems of many banks is deterring them from porting non-deliverable forwards (NDFs) executed with foreign exchange prime brokers to central counterparties, market participants say.

The problem – which may affect as many as two-thirds of dealers – prevents banks from tracking profits on cleared trades with buy-side clients and attributing these to individual salespeople.

“Executing brokers have a problem: when they move a trade facing a client and its prime br