Represents the largest USD interest rate swap tear-up to date for SwapClear
LCH.Clearnet Limited (LCH.Clearnet) and TriOptima announce that SwapClear members have torn up $7.1 trillion notional principal in SwapClear-cleared USD-denominated interest rate swaps (IRS) in a triReduce termination cycle, thereby eliminating them from LCH.Clearnet’s SwapClear service.
Twelve SwapClear members took part in the process which represents the largest notional reduction of USD IRS trades from SwapClear to date. The elimination of these trades streamlines systems processing and reduces operational and administrative burdens in the event of a default. The average duration remaining for the terminated trades was 9.1 years.
”The compression cycles that we run in cooperation with LCH.Clearnet and SwapClear achieve significant reductions in both the notional and number of transactions outstanding which enhance efficiency and eliminates risk,” said Peter Weibel, ceo of triReduce. “This is a natural extension of the triReduce service into the clearinghouse environment, enabling us to support the industry in its efforts to create a leaner, more robust marketplace. We look forward to delivering a regular schedule of compression cycles.”
Michael Davie, ceo, SwapClear at LCH.Clearnet said: “Given that the maturity of OTC IRS trades can be very long-dated, using triReduce to compress the notional value of cleared transactions is vital as it frees up capacity and reduces the operational costs. We are pleased to be working with the industry on initiatives such as this to continually enhance efficiencies within the OTC IRS market.”
This is one in a series of cycles planned by TriOptima and LCH.Clearnet to reduce the interest rate swaps maintained within SwapClear across the full range of currencies. Overall, SwapClear and TriOptima have torn up $66.3 trillion in notional principal using triReduce.
