VM rules sound death knell for forex swaps in Europe

Market participants claim instrument was a “mythical creature” that never really existed

Absent clarification from regulators, some dealers and buy-side firms have obtained legal opinions allowing them to classify forex swaps as forwards

Dealers and buy-side firms have effectively killed off foreign exchange swaps in Europe, thanks to new rules requiring the instruments to be collateralised.

Market participants, however, argue forex swaps never really existed in the first place. “We came to realise at the end of 2016 that the forex swap is a sort of mythical creature,” says a senior manager at a UK-based currency management firm.

In essence, forex swaps consist of just two forex forwards, where parties agree to buy a currency

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe

You are currently unable to copy this content. Please contact info@risk.net to find out more.

Sorry, our subscription options are not loading right now

Please try again later. Get in touch with our customer services team if this issue persists.

New to Risk.net? View our subscription options

If you already have an account, please sign in here.


Want to know what’s included in our free membership? Click here

This address will be used to create your account

You need to sign in to use this feature. If you don’t have a Risk.net account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here