TriOptima, provider of OTC derivative post trade services, today announces that since the resumption of triReduce compression cycles within LCH.Clearnet’s SwapClear service in December 2013, members have eliminated $114 trillion in notional principal. This brings the cumulative total of notional compressed by TriOptima and SwapClear to $302trillion.
Lowering gross notional exposure contributes to bringing an institution’s leverage ratio in line with regulatory expectations, an important goal for banks. Trade compression cycles help ensure post-trade efficiency; and running regular cycles in a range of currencies reduces both the gross notional and the number of outstanding OTC derivative transactions in the clearing house.
“SwapClear members benefit significantly from compression,” said Daniel Maguire, global head of SwapClear. “We began providing the service in 2009 and, since then, new capital requirements have brought even greater incentives for banks to reduce the number of trades on their books. We look forward to continuing to reduce notional outstanding and drive market efficiencies through regular compression cycles.”
There have been 16 compression cycles in EUR, GBP, JPY and USD interest rate swaps with 40 participants joining some or all of them since December 2013. Cycles are scheduled weekly, and additional currencies cleared in LCH.Clearnet’s SwapClear will be added to the schedule this year. AUD and CHF cycles were offered for the first time in May.
“The triReduce multilateral algorithmic solution is uniquely structured to optimize compression for a large number of participants simultaneously which is the most efficient way to reduce portfolio exposures,” said Peter Weibel, CEO of triReduce.
Since the launch of triReduce in 2003, OTC derivative market participants have eliminated more than $476 trillion in notional principal outstanding using the service to terminate both cleared and uncleared trades across a broad spectrum of products. triReduce cycles include cleared interest rate swaps and uncleared interest rate swaps in 27 currencies, credit default index and single name swaps and commodity swaps.