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Screenshot of a breaking news alert e-mail from Q2 2017
TriOptima, a leading provider of OTC derivative post trade risk management services, announces today that 11 financial institutions eliminated $8.8 billion notional principal outstanding in the first USD/KRW (Korean Won) cross currency swap triReduce compression cycle.
Cross currency swaps are subject to both interest rate and foreign exchange rate fluctuations and are not currently cleared. They increase an institution’s credit and capital costs as well as its settlement risk.
TriOptima has run 13 successful triReduce cross currency swap compression cycles since April 2014 in USD/CAD, USD/CNH (Chinese yuan) USD/EUR, USD/GBP, USD/JPY, USD/MXN (Mexican peso), USD/RUB (Russian ruble) and USD/ZAR (South African rand) with 37 different participants joining one or more cycles. Over $1 trillion in notional principal has been eliminated in these cycles
Additional cross currency compression cycles are planned in 2015 in the currencies already offered and in new currencies including USD/AUD (Australian dollar), USD/CHF (Swiss franc) and USD/CNY (Chinese yuan). triReduce compression cycles can accommodate all transaction types whether they are float/float or fixed/float, or resetting and non-resetting basis swaps.
“Cross currency swap compression is now part of normal business operations for Asian institutions,” said Yutaka Imanishi, CEO of TriOptima Asia Pacific. “There is a strong awareness of the operational and capital efficiency benefits of compression and a need to reduce notional exposure on the balance sheet.”
To learn more about swap compression from TriOptima, click here.