On February 4, 2015, ESMA published its Feedback Statement on its consultation on the clearing obligation for non-deliverable forwards (“NDFs”). ESMA confirmed that it has decided against moving forward, at this time, with mandatory clearing requirements for NDFs following the concerns raised by industry participants during the consultation which include: (i) the timing of entry into force of the proposed clearing obligation particularly when participants are currently dealing with implementing processes for compliance with the clearing obligation for IRS and CDS; (ii) that only one EU CCP is authorized to clear NDFs; (iii) the lack of experience globally of NDF clearing; (iv) the importance of international consistency in implementation of the proposed clearing obligation; and (v) the lack of a consistent definition for FX derivatives across the EU. ESMA originally proposed regulatory technical standards for clearing NDFs with an implementation schedule beginning in Q4 2015. ESMA is of the view that more time is needed to properly consider those concerns, but stressed that its current position did not exclude the possibility of it proposing a clearing obligation for NDFs in future.

ESMA’s feedback statement is available at: http://www.esma.europa.eu/news/ESMA-issues-feedback-statement-central-clearing-non-deliverable-forwa rds?t=326&o=home.