Non Deliverable Forwards

What is Non-deliverable Forward (NDF)?

NDFs are foreign exchange derivatives products traded over the counter. The counterparties of the NDF contract settle the transaction, not by delivering the underlying pair of currencies, but by making a net payment in a convertible currency (typically the US dollar) proportional to the difference between the agreed forward exchange rate and the subsequently realized spot fixing. Established market standards for both the spot fixing rate sources and the determination of fixing date and settlement date ensure the consistency of the contract and simplify the trading processes between counterparties.

NDF is a popular product in Asian market. NDF markets are mainly developed for emerging markets in Asia with capital controls, where the currencies cannot be delivered offshore. It facilitates offshore participants to effectively hedge against foreign exchange risk on those Asian countries.

OTC Clear NDF Product Coverage

OTC Clear currently offers the clearing services of the 4 most popular NDF products in Asia. A summary of clearable NDF products is listed below and the details of product eligibility requirement can be found in the OTC Clear Clearing Procedures.

Reference Currency Settlement Currency Maximum
Residual Term
CNY (Chinese Renminbi) USD 2 years
INR (Indian Rupee) 2 years
KRW (South Korean Won) 2 years
TWD (Taiwanese Dollar) 2 years

Updated 29 Oct 2013