Deliverable Forwards
You sell a deliverable forward by wrapping CRX's locked-rate leg, the NDF, in your own spot conversion. No volatility premium, no balance-sheet rent, no market risk to you.
What is your customer missing?
A way to lock a future exchange rate without paying a premium for it.
Your customer agrees a price today and settles weeks later. In between, the rate moves, and the move is theirs to absorb. Today the only tool you can hand them is a wider spread: a guess at the volatility, padded against a bad move. That guess is too expensive when the market is calm and too thin when it is not.
The instrument that removes the guess is the non-deliverable forward (NDF): a contract that locks the rate and cash-settles the difference at maturity. It is the one piece you cannot offer today. See Non-Deliverable Forward (~3 min).
CRX supplies that locked-rate leg. You add your spot conversion and hand the customer one product: a deliverable forward.
How is FX volatility hedged?
Three instruments lock a forward rate. They cost differently.
| Hedge | What you pay | The catch |
|---|---|---|
| Deliverable forward | no premium, but the full notional is funded and onshore access is required | restricted or illiquid for most emerging-market currencies |
| FX option / collar | a volatility premium, up front | flexibility you do not need when you only want a locked rate |
| NDF | no premium, no delivery, cash-settled | settles the rate difference; you add the spot leg separately |
The option and the deliverable forward each ask the customer to pay for something they did not come for. The NDF does not.
Why does every other hedge cost a premium?
The first is the forward premium: the gap between today's spot and the locked rate. It is set by the interest-rate differential between the two currencies, and every forward carries it, NDF included. It is the fair price of time, not waste (BIS Quarterly Review, Dec 2025, Global FX markets when hedging takes centre stage).
The second is the volatility premium: what an option charges on top. An option sells optionality, the right to walk away if the rate moves your way. Your customer does not want that right. They want one rate, fixed. The volatility premium is money paid for a feature they will never use.
The deliverable forward escapes the volatility premium but asks for two other things: the full notional funded up front, and onshore access to the currency. For most emerging-market currencies that access is restricted, or the market is too thin to use.
Why is the NDF the clean leg?
It charges only the forward premium, and settles in cash.
No option premium. No delivery. No full notional funded; the trade is margined, not pre-paid. At maturity it pays the difference between the locked rate and the reference fixing, in cash. The offshore NDF market exists for exactly this: to hedge currencies whose onshore forward markets are restricted, illiquid, or costly. See BIS / NY Fed, Lipscomb, An Overview of Non-Deliverable Foreign Exchange Forward Markets and IMF WP/20/179, Offshore Currency Markets: NDFs in Asia.
You add your own spot leg on top, and the product becomes deliverable.
NoteCaveat. For a freely convertible currency, a deliverable forward prices close to the NDF. The NDF's edge is largest in restricted and emerging-market currencies, where CRX operates.
What does CRX add?
It delivers the NDF cleanly: the same instrument, without the bank's capital rent.
A bank NDF charges three lines: a headline spread of 50 to 300+ bps, a carry, and a capital charge of 20 to 100+ bps, the rent on the balance sheet that backs the trade. CRX keeps the carry (same fixing, a tie) and replaces the rent with light margin you post yourself, which can sit in a yield-bearing asset and earn while it secures the trade.
Under your product sits settlement-grade infrastructure:
- Segregated collateral. Customer funds and margin held apart, not on a balance sheet.
- On-chain enforcement. The locked rate, the daily margin, and the close-out run as code, not as a counterparty's promise.
- A reference price. The fixing both sides settle against, the same one used to mark the trade each day.
You face the customer. CRX is your counterparty on the hedge underneath. You take on no market risk and commit none of your own capital.
Next: Build a Deliverable Forward (~6 min). The step-by-step wrap.