ASX goes live with TriOptima’s compression service for cleared OTC derivatives

Rick Steves

TriOptima’s technology helps lower costs and mitigate risk in OTC derivatives markets.

The Australian Securities Exchange (ASX) has gone live with TriOptima’s compression service, triReduce.

TriOptima’s technology helps lower costs and mitigate risk in OTC derivatives markets. triReduce allows firms to reduce or eliminate their trades within the exchange’s clearing house, including trades with mismatched cash flow dates.

Firms then are able to reduce the size of their cleared OTC derivatives portfolio, which comes in handy in terms of capital management as they can now complete regular compression runs in the region and benefit from a reduction in capital, risk, and operational costs.

Philip Junod, Senior Director, triReduce and triBalance business management, said: “We are delighted to support ASX in offering compression to their clearing members. This further expands the list of clearing houses that TriOptima partners with, and is testament to our truly global service. 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.”

Allan McGregor, Senior Manager, Rates at ASX, commented: “Compression services lower costs and drive operational efficiency for users of OTC derivatives. In partnership with TriOptima, ASX has invested in this critical service for our OTC clearing customers who are looking to reduce operational risk and lower capital costs in accordance with domestic and global capital requirements.”

TriOptima completes first benchmark conversion risk replacement trades at Japan Securities Clearing Corporation

TriOptima completed the first infrastructure service that helps to lower costs and mitigate risk in OTC derivatives markets, has announced the completion of the first triReduce enhanced compression Japanese yen cycle in December 2020.

The cycle, which includes Tokyo Overnight Alternative Rate (TONA) risk replacement trades, took place on December 4, 2020 at the Japan Securities Clearing Corporation (JSCC).

The triReduce benchmark compression service allows swap market participants to reduce their gross and net exposure to legacy benchmarks while increasing their adoption of alternate benchmarks through risk replacement trades.

TriOptima provides frequent compression cycles in all the major central counterparty clearing houses in all cleared currencies. After this first risk replacement compression cycle in Japanese yen, triReduce will continue to offer enhanced compression/benchmark conversion cycles in other currencies as the market need arises.

The firm, which is part of CME Group, has recently extended its collaboration with AcadiaSoft to automate monthly collateral interest payments, making trade processing more efficient for over-the-counter (OTC) market participants.

According to International Swap Dealers Association (ISDA) data, cash collateral accounts for approximately 70% of all collateral exchanged for non-cleared derivatives, equivalent to $1.3 trillion in 2019 alone.

A significant proportion of this market still relies on email and manual reconciliation to manage the interest process. Now, with TriOptima’s expanded support for AcadiaSoft’s new interest payments messaging, the wider industry can benefit from increased efficiencies.

AcadiaSoft since then rebranded to Acadia in line with its vision for the trading industry.

 

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