Volumes in NDF markets have increased dramatically in recent years, but what is behind this accelerated activity and will it continue? More importantly, what role are the lessons learned from the G10 markets playing? Colin Lambert finds out.
The biggest growth story in foreign exchange over the past two years since the Bank for International Settlements’ 2016 Triennial Survey of FX Turnover has largely taken place in the shadows, for while spot volumes have largely plateaued, activity in the non-deliverable forward segment has grown exponentially. NDF average daily volumes, as reported by the UK and US foreign exchange committees, is 50% in the two years from April 2016 – a pace of growth no other product can match.