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TriOptima completes first cleared inflation swap compression run in LCH SwapClear

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TriOptima, an infrastructure service that aims to lower costs and mitigates risk in OTC derivatives markets, has completed the first cleared inflation swap compression run at LCH SwapClear.

The compression run was completed on 19 July with Euro cleared inflation swaps being compressed through the triReduce service. TriOptima will go live with Sterling and US Dollar cleared inflation swaps compression in LCH SwapClear imminently.

In order to manage capital pressures, clients for the first time can ‘co-mingle’ cleared inflation swaps with vanilla swaps by leveraging the new triReduce low touch compression service. Launched in late 2018, low touch compression was quickly adopted by several of the largest banks as the next evolution in the compression process, delivering improved usability, user transparency and full automation together with API technology. The new service minimises the number of clicks required to run a compression cycle and provides enhanced data validation checks to streamline the user experience. As a result, clients can complete compression runs on a daily basis and benefit from a reduction in capital, risk and operational costs.

“Increasing balance sheet pressures and growing resource constraints have seen banks increasingly turn to compression as an effective means of mitigating costs and risks. As a result, it’s important that compression services evolve to meet the needs of clients today,” says Michael Modlock, Global Head of Sales and Relationship Management, triReduce. “We’re pleased to compress cleared inflation swaps for the first time, delivering this via our new low touch compression approach which not only minimises the time spent by clients, but also provides superior data checks so they can compress in confidence.”

“With clearing of inflation swaps up over 55 per cent year-to-date compared to the same period in 2018 across 200 users, we’re seeing strong demand continue for compression services,” says Cameron Goh, Global Head of Product, Rates, LCH. “Compression is a crucial tool in driving efficiency for the cleared market. The ability to compress inflation swaps is of particular significance for members and clients who are looking to boost operational and capital efficiency.”

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