No, the rollover mechanism does not prohibit the purchase of Cleared USD/NGN NDFs contracts longer than six (6M) months. Foreign Portfolio Investors may still purchase Cleared USD/NGN NDFs contracts of any tenor subject to the existence of a valid CCI and compliance with the provisions of the extant Cleared USD/NGN NDFs Market Operational Standards may still be made.
However, only Cleared USD/NGN NDFs contracts with tenor from 1M – 6M can be rolled over. Consequently, while the purchase of Cleared USD/NGN NDFs contracts with tenors from 7M – 12M remains permissible for FPIs, subsequent purchase of 7M – 12M Cleared USD/NGN NDFs contracts cannot be booked as a rollover under the provisions of MB-33. To clarify; an FPI with a valid CCI who purchases a 9M Cleared USD/NGN NDFs contract and decides to buy another 9M Cleared USD/NGN NDFs contract may do so in line with the provisions of the Cleared USD/NGN NDFs Market Operational Standards. However, the purchase of the new 9M Cleared USD/NGN NDFs contract cannot be booked and treated as a “rollover” under MB-33 because the combined tenor of the original hedge (9M) and the subsequent hedge (9M)
is eighteen (18M) months, thus violating the provision of clause3(iii)of
MB-33.
Copyright 2024 — FMDQ GROUP PLC | ALL RIGHTS RESERVED