TriOptima announces today that it eliminated JPY 271.6 trillion (USD3 trillion) in cleared interest rate swap notional principal outstandings from LCH SwapClear, the largest ever triReduce compression cycle in JPY interest rate swaps. Since TriOptima began offering its triReduce early termination service in JPY in 2004, almost JPY1,600 trillion (USD18.3 trillion) in cleared and uncleared swaps have been eliminated.
“The banks, LCH SwapClear and TriOptima worked together to achieve these record-breaking results,” said Ken Nishimura, head of TriOptima Japan. “Contributing to the success of the cycle was an increase in participants as institutions recognize the benefits of compression. We anticipate continued expansion of the process in 2013.”
Compression services are offered through TriOptima’s triReduce service to swap market participants with significant two-way flow. In triReduce, participants are able to tear up their existing trades at their own mid mark-to-market valuations avoiding the difficult negotiation process of bilateral termination. Multilateral terminations leverage off the expanded number of participants and result in increased numbers of terminated trades.
Eliminating unnecessary swaps in an OTC derivatives clearinghouse promotes the efficient use of capital and collateral and contributes to overall financial stability by moderating the pace of growth in outstanding notional principal in the market.