NDF Commodities (Non-CCP) Contracts – Scheduling Early Cash Settlement

Optional

New improvement will allow early cash settlement of NDF Commodities contracts to be scheduled in up to T+3 from the trade date

Clients who trade NDF Commodities contracts will now have the flexibility of scheduling early cash settlement of the contract so that early cash settlements on T0 are no longer mandatory.

This improvement aims to bring greater flexibility to investors and allow the early cash settlement to be generated in up to 3 days from the trade date, providing a longer time window to raise the cash required to settle the transaction. With this, problems with hour windows or cash availability can be better managed by the parties.

Project Tags:

OTC

Completed

Derivatives

Product benefits

Better cash management

More time to raise the early cash needed.

Greater flexibility

For the product and trades.

How the transaction will work in practice

Learn about the details of this transaction

A field called “Settlement Date” will be added so that T0 up to T+3 may be chosen. Once this is done, scheduling cash settlement will be enabled only in the early settlement functionality on screen.

A feature for scheduling the trade settlement will also be created and it will be displayed in the NDF Commodities transfer file.

This flexibility will be available for NDF Commodities trades with both market and client counterparty, as it already exists for non-CCP NDF Currencies.

NDF Commodities is an OTC product and is usually offered by institutions to their clients as an alternative to hedge commodity prices. NDF Commodities contracts are typically benchmarked to futures contracts on foreign exchanges whereby commodities are traded in foreign currency and, therefore, there is also a currency risk involved.

For further information, contact your RM or the Products team – OTC Derivatives and COE at [email protected]