At the start of this year, a new BSP ruling imposing a cap on banks' holdings of nondeliverable forwards
(NDFs) took effect.
Importantly, the final determination doesn't extend to other FX derivatives, such as FX options, currency swaps, and nondeliverable forwards
13) A typical example in today's marketplace would include spot and forward foreign-exchange contracts including, most likely, derivative equivalents, such as nondeliverable forwards
Since the early 1990s, however, some international banks have been offering an offshore, over-the-counter market in nondeliverable forwards
(NDFs) for many emerging-market currencies, including the Chinese renminbi.
Recently, a market in nondeliverable forwards
(NDFs) has arisen to provide cover for companies trading in renminbi.
Also, the BSP earlier this year slapped a higher capital charge on purchases by banks of nondeliverable forwards
In January, the BSP imposed higher capitalization requirement on banks' holdings of nondeliverable forwards
(NDFs)--a hedging instrument meant for clients of banks engaged in export and import activities--to discourage excessive investments in them.