European international change prime brokers (FXPBs) have been capable of lure hedge fund shoppers away from US rivals by providing extra beneficial preliminary margin necessities for FX choices trades.
The globally agreed non-cleared margin guidelines require corporations utilizing FX choices to put up preliminary margin on the trades, however deliverable FX forwards – a standard delta hedge for choices – are exempted. This implies each sellers and shoppers are unable to offset the ensuing threat exposures in opposition to one another, leaving a
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