In recent years, demand for compression services has risen as market participants look to lower capital costs associated with balance sheet-intensive derivatives.
ASX has adopted TriOptima’s triReduce compression service for cleared OTC derivatives to allow local and regional banks to better manage capital, risk and operational costs.
TriOptima, part of CME Group, provides post-trade risk management and infrastructure services for OTC derivatives market participants.
The triReduce compression service enables aggregation and netting of multiple offsetting OTC derivatives trades to effectively reduce the notional value of a portfolio while maintaining the same net risk.
“To manage capital pressures, local and global banks can now complete regular compression runs in the region and benefit from a reduction in capital, risk and operational costs,” TriOptima said in a statement. “Regardless of where in the world market participants choose to clear, they can be confident of compressing their OTC trades to better manage their exposures.”
In recent years, demand for compression services has risen as market participants look to lower capital costs associated with balance sheet-intensive derivatives. Compression also helps swap market participants proactively reduce their exposure to LIBOR and increase adoption of alternative reference rates in currencies impacted by benchmark reform.
In December, TriOptima announced the completion of the first triReduce enhanced compression at the JSCC (Japan Securities Clearing Corporation), on a Japanese yen cycle which included TONA risk replacement trades.
The first triReduce SONIA benchmark compression cycle was also completed in October.
