TriOptima SwapClear Completes First Client-cleared Trades for CAD Swaps

Client-cleared trades are cleared through a FCM on behalf of market participants who are not direct members of a CCP.

TriOptima, which provides OTC derivatives post-trade and risk reduction services, today announced that 18 entities participated in the recent SwapClear compression cycle for Canadian Dollar (CAD) interest rate swaps, terminating $1.38 trillion CAD (US$ 1.05) in notional principal for the first client-cleared trades.

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Launched at a time when international regulators have encouraged compression services for non-centrally cleared OTC derivatives, TriOptima service combines CLS’s infrastructure and market connectivity with its triReduce compression product to enable counterparties to reduce the gross notionals of their outstanding portfolios without fundamentally changing their market positions.

Currently TriOptima delivers triReduce compression for cleared trades in collaboration with leading clearinghouses (CCPs) around the globe. TriOptima also offers triReduce to CLS members for FX forwards.

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According to TriOptima’s announcement, client-cleared trades are cleared through a Clearing Broker or Futures Commission Merchant (FCM) on behalf of market participants who are not direct members of a CCP. Including client-cleared trades in all future SwapClear triReduce compression cycles “expands the participant base and liquidity pool, increasing compression efficiency.”

Many major firms including hedge funds, asset managers and other financial firms, such as Citadel, have also embraced new technologies to pare down their remaining counterparty risks by identifying overlapping trades and offsetting them.

John Naud, COO of Global Fixed Income for Citadel commented: “We are pleased to participate in the inaugural triReduce cycle and to see TriOptima’s portfolio compression solutions become available to more market participants. We have long supported buy side access to these solutions and look forward to the benefits that this will bring to the market.”

Cameron Goh, Global Head of Rates and FX Derivatives at LCH added: ”This enhancement means that our clients now have even more opportunities to compress trades by accessing SwapClear’s large pool of OTC liquidity. We continue to see strong demand for compression services, and our buy-side clients are particularly keen on using these tools to maximize their operational efficiency.”

“Including client-cleared trades increases the participant base in triReduce cycles and generates larger pools of eligible trades for compression, improving cycle efficiency and results for all participants. This also expands the benefits of risk, capital and operational cost reductions to a substantial new segment of market participants,” concluded Peter Weibel, CEO of triReduce.


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