CLS and TriOptima launch triReduce CLS Forward FX Compression Service
27 October 2015
27 October, 2015 – CLS Group (CLS), a leading provider of risk mitigation and operational services for the global foreign exchange (FX) financial market infrastructure, and TriOptima, a leading provider of OTC derivatives post-trade and risk reduction services, announce today that they have launched the triReduce CLS Forward FX Compression Service completing the first successful compression cycle for FX forwards and swaps transactions.
The new service combines CLS’s infrastructure and market connectivity with TriOptima’s triReduce compression product to enable counterparties to reduce the gross notionals of their outstanding portfolios without fundamentally changing their market positions.
Launched at a time when international regulators have encouraged compression services for non-centrally cleared OTC derivatives, the triReduce CLS Forward FX Compression Service is designed to reduce operational, credit and counterparty risk for institutions and enhance capital efficiency. It is consistent with the goals of EMIR, Basel III and Dodd-Frank, all of which seek a more robust and transparent post-trade environment.
Tobias Becker, Capital Management Trading at Credit Suisse, comments: "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."
David Puth, CEO of CLS, comments: “Trade compression is a vital tool in managing risk, leading to strong market demand for a compression service for FX forwards and swaps.
“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.”
Peter Weibel, CEO of triReduce, TriOptima’s compression service, comments: “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.”
CLS enhances financial stability by providing risk mitigation services to the global FX market. It operates the world’s largest multicurrency 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, CLS settles FX trades across 17 currencies.
CLS mitigates settlement risk by simultaneously settling the payments on both sides of an FX trade on a real time basis. It does this using its 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.
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, validate repository data, and deliver an integrated margin management solution; triBalance to manage cleared and bilateral counterparty risk; and triCalculate to measure and analyze counterparty risk.
For more information go to www.trioptima.com.
ICAP is a leading markets operator and provider of post trade risk mitigation and information services. The Group matches buyers and sellers in the wholesale markets in interest rates, credit, commodities, FX, emerging markets and equity derivatives through voice and electronic networks. Through our post trade risk and information services we help our customers manage and mitigate risks in their portfolios. For more information go to www.icap.com.