What is a “not for delivery” (NFD, or non-deliverable) transaction?
Non-deliverable forex contracts do not require physical delivery of cash, but instead settle on the contract-for-difference basis at the time when the initial market position is closed. If positions are held overnight, a procedure is performed that moves the settlement date to the next business day to avoid currency delivery. Retail traders engage in non-deliverable transactions, while institutional traders such as companies and banks use deliverable contracts to meet currency requirements and hedging objectives.
