CLS Group, a provider of risk mitigation and operational services, has teamed up with over-the-counter (OTC) derivatives specialist TriOptima, to jointly launch the triReduce CLS Forward FX Compression Service.
The triReduce CLS Forward FX Compression Service helps consolidate CLS’s robust foreign exchange (FX) infrastructure as well as its market connectivity capabilities with TriOptima’s triReduce compression product. The end result is the capacity for counterparties to better reduce the gross notionals of their respective outstanding portfolios absent of any changes or schisms across their market positions. The service has also just completed its first successful compression cycle for FX forwards and swaps transactions.
The triReduce CLS Forward FX Compression Service has been unveiled and launched in the middle of a period of regulatory changes that are currently enveloping the market. This rings especially true across clearing for OTC derivatives, which has pushed for several specialized compression services.
In particular, the triReduce CLS Forward FX Compression Service was designed to help streamline operational, credit and counterparty risk for institutions, whilst bolstering capital efficiency. These considerations will be instrumental ahead of the regulatory benchmark goals stipulated under EMIR, Basel III, and Dodd-Frank.
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According to Tobias Becker, Capital Management Trading at Credit Suisse, in a recent statement on the launch: “Being able to compress FX forwards and swaps has the potential to not just simplify derivative portfolios and notionals but ultimately also to reduce counterparty exposure and costs. We welcome any initiative that helps increase the efficient management of FX derivatives in the marketplace.”
“Trade compression is a vital tool in managing risk, leading to strong market demand for a compression service for FX forwards and swaps,” noted David Puth, CEO of CLS, in an accompanying statement.
“By combining CLS’s infrastructure, network and expertise in the FX market with TriOptima’s knowledge of the OTC derivatives environment and experience with compression in other asset classes, this new service enables institutions to efficiently reduce counterparty and credit exposure and to meet global regulatory requirements,” he added.
“Working with CLS and its members underscores our commitment to providing robust and efficient compression services to a broad range of financial market participants. Adding FX forward compression is an important expansion of the asset classes in our catalogue of compression services,” reiterated Peter Weibel, CEO of triReduce, TriOptima’s compression service.