Clearing of Chilean NDFs hampered by netting uncertainty
The Central Bank of Chile has the authority to stop financial institutions netting down their transactions, which participants fear might prevent central counterparties from being able to clear contracts denominated in the Chilean peso
Restrictive Chilean laws on close-out netting - the process by which derivatives contracts can be legally terminated in the event of a default - could hinder progress to establish foreign exchange clearing in the Chilean peso, singled out by two central counterparties (CCPs) as a currency in which they plan to launch clearing of non-deliverable forwards (NDFs) this year.
In May, the Chicago Mercantile Exchange (CME) Group launched clearing for US dollar/peso NDFs through its ClearPort platform
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