Brokerage group ATFX announced on Friday that it has added non-deliverable forwards (NDFs) to its product suite for its institutional arm, ATFX Connect.
The broker said that the new products will provide access to pricing and liquidity for currency markets in Asia and Latin America.
“This is a testament to the firm’s unwavering commitment to our global client base,” said ATFX Connect Managing Director Wei Zhang. “By offering electronic pricing and access to NDFs, we are meeting the evolving needs of our clients. Our focus on automation and real-time streaming prices means greater liquidity and transparency and reflects our dedication to innovation and excellence in serving our institutional clients.”
An NDF is similar to forward contract in FX, where you agree to exchange two currencies at a set rate at a future date.
The difference with an NDF is that it typically involves currencies that are harder to convert, usually due to capital controls. As a result there is no settlement in the non-convertible currency.
Instead you settle in a base currency like the US dollar. Settlement is determined by the difference between the spot rate at the expiry date of the contract and the pre-agreed rate in the contract.
In a statement, ATFX said the product launch “reflects increasing demand from its clients for electronic trading capabilities in NDFs, and the ability to automate and offer streaming prices, thus allowing clients to participate more effectively in this space.”
Reading between the lines, what this may mean is that the price ATFX provides in NDFs allows retail brokers to offer trading in exotic currency pairs.