TriOptima eliminates $84 trillion in OTC derivatives notional principal outstandings in 2012; $322 trillion terminated since triReduce portfolio compression launched
16 January 2013
New York / London – January 16, 2013 TriOptima announces today that it eliminated $84 trillion in OTC derivatives notional principal outstanding in 2012: $80.5 trillion in interest rate swap notionals and $3.5 trillion in credit default swap (CDS) notionals. Of the $80.5 trillion, almost $72 trillion in reduced interest rate swap notionals were the result of ongoing efforts by LCH SwapClear, its member institutions and TriOptima to reduce outstandings in the clearinghouse.
Since TriOptima introduced its triReduce portfolio compression service in 2003, more than $322 trillion in notional principal outstandings have been eliminated: $245 trillion in interest rate swap notionals and $77 trillion in CDS notionals. Reducing gross notionals contributes to overall financial stability while also eliminating costs, credit and operational risk and capital requirements for the individual participants.
"We continue to work with the banks and clearinghouses to reduce gross notional exposure as final rules are published by the global regulators," said Peter Weibel, CEO of triReduce. "We are pleased that market participants continue to compress CDS and bilateral interest rate swaps while also focusing on cleared trades. We also began collaborating with SGX in 2012, and look forward to supporting other clearinghouse initiatives as they develop. Our 2013 plans include expanding the range of emerging market currencies for interest rate compression, adding products eligible for triReduce Commodities and introducing cross-currency terminations."
About TriOptima Compression
Compression services are offered through TriOptima's triReduce service to swap market participants with significant two-way flow. In triReduce, participants are able to tear up their existing trades at their own mid mark-to-market valuations avoiding the difficult negotiation process of bilateral termination. Multilateral terminations leverage off the expanded number of participants and result in increased numbers of terminated trades. Eliminating trades eliminates costs, credit and operational risk and reduces capital requirements.
Eliminating unnecessary swaps in an OTC derivatives clearinghouse promotes the efficient use of capital and collateral and contributes to overall financial stability by moderating the pace of growth in outstanding notional principal in the market.
TriOptima, an ICAP Group company, is the award-winning provider of OTC derivatives post trade risk management services including triResolve, triReduce and the recently-launched triBalance.
triResolve is a network community service that provides counterparty exposure management services including proactive portfolio reconciliation of OTC derivative portfolios, margin call management, and dispute resolution. Used by more than 250 firms including all global dealers, regional banks, asset servicers, and buy-side firms, triResolve regularly reconciles 6.3 million trades representing more than 90% of all collateralized OTC derivative transactions globally. The service benefits trade control, settlement, documentation, collateral and counterparty credit risk functions.
triReduce, the portfolio compression service for OTC derivative dealers, offers a range of multilateral compression services across asset classes that eliminates counterparty and operational risk and reduces operational and capital costs. Serving over 169 bank and non-bank subscribers worldwide including the major local and global dealers in derivatives, triReduce is a critical tool for maintaining post trade processing efficiency and minimizing counterparty exposure. triReduce offers compression cycles in single name and index CDS swaps worldwide, IRS swaps in 25 currencies, and a range of commodity derivatives.
triBalance, TriOptima's latest post trade service innovation, facilitates proactive counterparty risk management by rebalancing counterparty risk exposure between multiple CCPs and bilateral relationships (in Rates, Credit and Commodities) enabling an efficient use of capital and collateral and reducing systemic risk.
TriOptima maintains offices in London, New York, Singapore, Stockholm, and Tokyo.
For further information please contact:
Susan Hinko, Global Head of Industry Relations
Tel: + 1 646 744 0410
Candice Adam, Argentus PR
Tel: +44 20 7397 2915