CLS collaborates with TriOptima to deliver new FX compression service
20 January 2015
20 January 2015 – CLS Group (CLS), the global FX financial market infrastructure, and TriOptima, a leading provider of OTC derivatives post-trade risk management services and infrastructure, today announced they will be collaborating to deliver an FX forward compression service to the market.
CLS and TriOptima are delivering this service to address several needs of market participants, including the regulatory requirement for financial counterparties to consider the use of a compression service for non-centrally cleared OTC derivatives if available. FX forward transactions currently account for 13% of overall trading in the global FX market, according to the Bank for International Settlements1 – with trading volumes rising by 43% between 2010 and 2013. The new service will enable participants to reduce the number of trades effectively, limit their gross notional exposures and therefore reduce counterparty credit risk and leverage ratios, while ensuring compliance with EMIR, Basel III and Dodd-Frank.
David Puth, CEO of CLS, commented: “International regulators have recognized the importance of portfolio compression from a risk mitigation perspective, and CLS is ideally placed to deliver optimal access to an FX compression solution. The new service will significantly reduce exposure to risk and provide numerous operational and cost efficiencies that will help participants to comply with international regulatory requirements.
“This collaboration creates value for our settlement members through additional services that use our core operational and IT capabilities and those of TriOptima,” he added.
“We will continue to invest in new technology to ensure we provide the best possible risk mitigation service to the FX market.”
Peter Weibel, CEO of triReduce, TriOptima’s compression service, said: “Adding FX forwards to our compression catalogue underscores TriOptima’s continually expanding role in the OTC derivatives post trade infrastructure, having already eliminated more than USD524 trillion notional principal across multiple asset classes in cleared and uncleared environments.
“We are very pleased to be working with CLS and its members to deliver another important risk management tool to the industry. We believe this kind of collaboration serves the best interests of our mutual customers.”
CLS and TriOptima plan to begin offering the service later this year, subject to any necessary approvals.
For further information please contact:
CLS enhances financial stability by providing risk mitigation services to the global FX market. We operate the world’s largest multi-currency cash settlement service to mitigate FX settlement risk for our settlement members and their clients globally.
With more than 60 settlement members, comprising the world’s largest financial institutions, and third-party clients, including banks, funds, non-bank financial institutions and multinational corporations, we settle FX trades across 17 currencies2.
CLS mitigates settlement risk by simultaneously settling the payments on both sides of an FX trade on a real time basis. We do this using our unique payment-versus-payment settlement service which is linked to the real time gross settlement systems of the 17 currencies eligible for CLS settlement. The settlement of these payments and associated funding is final and irrevocable.
In November 2014, the average daily input volume submitted to CLS was 1.39 million instructions, with an average daily input value of USD5.17 trillion.
For further information, please visit the CLS website.
® CLS and the CLS logo are registered trademarks of CLS UK Intermediate Holdings Ltd.
TriOptima is the award-winning provider of post trade risk management services and infrastructure for OTC derivatives. Focused on reducing costs, eliminating operational and credit risk, improving counterparty exposure management, and reducing systemic risk, TriOptima offers a range of services: triReduce to reduce swap inventory and counterparty risk; triResolve to reconcile OTC derivative portfolios, manage disputes and validate repository data; triBalance to manage cleared and bilateral counterparty risk and triCalculate to measure and analyze counterparty risk.
Its compression service triReduce is currently offered in numerous asset classes such as cleared and uncleared interest rate swaps (including OIS and FRAS), cross currency swaps, credit derivatives, and commodity swaps, with FX forwards and inflation swaps coming soon.
TriOptima is an ICAP Group company. For further information, please visit the TriOptima website.
- The Bank for International Settlements Triennial Central Bank Survey of FX and derivatives market activity in 2013.
- Australian dollar, Canadian dollar, Danish krone, euro, Hong Kong dollar, Israeli shekel, Japanese yen, Korean won, Mexican peso, New Zealand dollar, Norwegian krone, Singapore dollar, South African rand, Swedish krona, Swiss franc, UK pound and US dollar.