- 27 Jan 2021
- By CME Group
- Topics: triReduce
The new company will include trade processing and risk mitigation operations. It will incorporate CME Group's optimization businesses –Traiana, TriOptima, and Reset – and IHS Markit's MarkitSERV.
We completed the first triBalance FX cycle optimizing both SA-CCR and initial margin exposures to maximize capital efficiencies for our network of 30 banks.
triReduce has introduced counterparty exposure optimization into FX compression cycles. We now have clients live in each cycle, optimizing on: offsetting for leverage ratio improvement, risk rebalancing for RWA, and PFE Reduction under SA-CCR, as well as the more traditional compression for gross notional reduction. Despite challenging market conditions, 2020 saw YoY growth of 140% for net notional optimization.
Mattias Palm, head of triReduce FX, presented at the FX Markets Asia virtual conference on "How Innovation Is Reshaping the FX Market – a Post-trading Perspective."
triBalance counterparty risk optimization service can help:
- Reduce the cost of funding Initial Margin
- Reduce capital requirements for SA-CCR and RWA
- Free up collateral, for more efficient use of operational resources
- Reduce contagion and systemic risk
- Holistically optimize and reduce the cost of running a trading book
The size of our network of clients allows counterparty risk to be rebalanced and managed between counterparties multilaterally to maximize efficiency.
We've launched a brand new website, built on an upgraded platform that enables a deeply streamlined compression process for our users.
LatAm compression is accelerating, we have compressed over 12 trillion USD across Brazilian real and Mexican peso IRS at CME Group since launch, rolled out trade revision in MXN and added Colombian and Chilean peso IRS in 2020.
Record participation from direct members, clients, and clearing brokers drove SGD compression to over 1.8 trillion notional reduced, more than 46% of the outstanding in LCH. We also extended our currencies adding USD/NZD cross-currency swaps and the Thai baht, our 10th cleared regional currency.
Customers at Japan Securities Corporation (JSCC) can now benefit from improved compression efficiencies and streamlined processes, including electronic acceptance and co-mingled cycles - IRS, basis, OIS, and client cleared.
Bringing certainty to legacy benchmark transition
As part of our continued rollout of triReduce benchmark conversion, we will be offering all cycle participants the opportunity to test receiving risk replacement trades as part of their triReduce Unwind Proposal. These risk replacement trades play an integral role in the proactive management of any benchmark transition for interest rate swaps.
TriOptima completed the first triReduce enhanced compression Japanese yen cycle, which included Tokyo Overnight Alternative Rate (TONA) risk replacement trades. The cycle took place on December 4, 2020 at the Japan Securities Clearing Corporation (JSCC).
triReduce benchmark conversion has the capacity to run conversion alongside compression at scale, helping participants proactively reduce their exposure while increasing their adoption of the alternative reference rates in currencies impacted by benchmark reform.
Learn how TriOptima combines the reduction of gross notional exposure and the conversion of net risk exposure to deliver outsized results.
Vikash Rughani, Business Manager at triReduce, outlines a new approach enabling buy- and sell-side participants to optimize the conversion of legacy ICE LIBOR OTC swaps.
Transition your existing legacy OTC ICE LIBOR swap portfolios to the new alternative reference rates, or risk-free rates (RFRs).
Awards
FX Markets Asia: Post trade service
FX Markets e-FX: Best compression/optimization service for FX
Global Capital Americas: Compression Service of the Year
FTF Awards: Service Provider of the Year
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