A long tail of buyside firms will be forced to collateralise currency hedges from January, as sweeping European reforms bring trillions of dollars of FX forwards into scope for variation margin payments. The contracts, which were initially excluded from uncleared margin requirements under the European Market Infrastructure Regulation, will join FX swaps and non-deliverable forwards in the regulatory net following implementation of MiFID II. MiFID II includes the instruments in its definition of derivatives and subjects them to EMIR requirements.
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