BGC Brokers’ Capitalab launches combined options and LCH cleared swaps compression

Maria Nikolova

The Swaptioniser portfolio compression service has successfully executed the first combined compression cycle in Swaptions, Caps, Floors and LCH cleared interest rate Swaps and Forward Rate Agreements.

Capitalab, a division of BGC Brokers L.P. (“BGC Brokers”), an entity within BGC Partners, Inc. group of companies (NASDAQ: BGCP) today announced that its Swaptioniser® portfolio compression service has successfully executed the first combined compression cycle in Swaptions, Caps, Floors and LCH cleared interest rate Swaps and Forward Rate Agreements (FRAs).

As a result Capitalab’s appointment as an Approved Compression Service Provider (ACSP) for LCH’s SwapClear service (LCH’s clearing platform for interest rate derivatives), Capitalab’s non-cleared Rates compression service now includes LCH cleared Swaps and FRAs within the same cycle as bilateral Swaptions, Caps, Floors and Swaps. Capitalab is the first provider to offer a combined option and cleared swap product approach, where additional risk offsets and the larger trade pool provide attractive improvements in compression and operational efficiency.

“With this new milestone, Capitalab is leveraging its Swaptions expertise in the compression space to deliver a new solution to the industry, on the back of strong demand. Our clients appreciate the ability to combine major Interest Rate products in one streamlined compression exercise, reducing gross notional, leverage exposure and counterparty risks in an efficient manner,” said Gavin Jackson, Capitalab’s London-based co-founder.

“We now have an enhanced multi-product multilateral compression with cleared and bilateral trades combined in the same exercise: notional reduction of both bilateral and CCP positions. As a result, we believe Capitalab’s service facilitates significantly more flexible constraints and allows cleared positions to be offset with bilateral positions, particularly regarding Caps, Floors and Swaptions which can carry significant delta. We were also very pleased to have clients such as J.P. Morgan and Citi included,” said David Bachelier, Capitalab’s Singapore-based co-founder.

Cameron Goh, Global Head of Product, Rates and FX, LCH, said: “We are delighted to welcome Capitalab as an additional compression partner at SwapClear to provide more choice to our members and their clients. The ability for customers to compress cleared and non-cleared positions increases opportunities to drive down notional outstanding and increase capital and operational efficiencies for the market. We look forward to completing more compression cycles with Capitalab on behalf of our mutual customers.”

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