TriOptima Compressed $16 Trillion of Cleared Interest Rate Swaps in December 2013

TriOptima, ICAP's post-trade Risk Management Risk Management One of the most common terms utilized by brokers, risk management refers to the practice of identifying potential risks in advance. Most commonly, this also involves the analysis of risk and the undertaking of precautionary steps to both mitigate and prevent for such risk.Such efforts are essential for brokers and venues in the finance industry, given the potential for fallout in the face of unforeseen events or crises. Given a more tightly regulated environment across nearly every asset class, One of the most common terms utilized by brokers, risk management refers to the practice of identifying potential risks in advance. Most commonly, this also involves the analysis of risk and the undertaking of precautionary steps to both mitigate and prevent for such risk.Such efforts are essential for brokers and venues in the finance industry, given the potential for fallout in the face of unforeseen events or crises. Given a more tightly regulated environment across nearly every asset class, Read this Term infrastructure division, has announced today that it has resumed its triReduce compression cycles within LCH.Clearnet’s SwapClear service, eliminating $16 trillion in notional principal with one EUR and one USD interest rate swap cycle during the last month of 2013. This latest figure brings the cumulative total of notional compressed by TriOptima and SwapClear to $204 trillion.

Utilizing the triReduce service, members are able to pull apart their existing trades at their own mid mark-to-market valuations so the negotiation of a bilateral termination is redundant and the number of eliminated trades increases. TriOptima has been offering this service since 2003 and is now available in 25 currencies with around 180 regional and global institutions participating worldwide.

The importance of multilateral interest rates swaps compression for the Forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Read this Term industry is that it reduces the overall costs of interbank multi-currency transfers required to settle trades between different trading desks. This process has made a considerable impact in reducing fees which in turn has led to tighter FX spreads over the last three years.

TriOptima stated in the announcement that with the resumption of triReduce multilateral compression in December 2013, 33 SwapClear clearing members reduced their gross notional outstandings by almost $43 trillion last year. Lower gross notional exposure contributes to bringing an institution’s leverage ratio in line with regulatory expectations, important in today's world. Trade compression cycles also help ensure post-trade efficiency. 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.

Peter Weibel, the CEO of triReduce, commented in the announcement: “We know there is strong interest from customers to eliminate as much gross notional exposure as possible in the Clearing House, and we have collaborated with LCH.Clearnet’s SwapClear service and its clearing members to develop an ambitious compression schedule for 2014.”

Daniel Maguire, head of LCH.Clearnet SwapClear US added: “Our clearing members are under increasing pressure to reduce notional outstanding due to the emerging capital rules on derivatives, and the reintroduction of the triReduce compression service within SwapClear is therefore a key component of our offering.”