LCH SwapAgent and TriOptima compress first cross-currency swaps

LCH SwapAgent has said that €4.5 billion in notional of trades were compressed via TriOptima’s triReduce service.

Post-trade derivatives services provider TriOptima has compressed the first batch of cross-currency swap trades registered in LCH’s non-cleared derivatives clearing service, SwapAgent.

UK clearinghouse LCH said that €4.5 billion in notional of trades were successful compressed in TriOptima’s multilateral USD/EUR cross-currency swap compression cycle via its triReduce service. LCH SwapAgent and non-SwapAgent trades were combined to achieve maximum benefits, both firms said.

Compression allows LCH’s clearing members to eliminate offsetting trades to reduce notional outstanding and the number of line items in a portfolio. LCH said that capital requirements introduced by the Basel III  leverage ratio have incentivised banks to reduce notional outstanding.

“We’re delighted to have worked with TriOptima to achieve this meaningful reduction in notional outstanding on behalf of our customers,” said Nathan Ondyak, global head of LCH SwapAgent. “As members continue to onboard and use LCH SwapAgent to standardise and improve the processing of non-cleared OTC derivatives, we anticipate that uptake of these compression services will continue to grow.”

In November last year, LCH SwapAgent processed its first swaption trades, which were executed by Deutsche Bank and Nomura. Two swaption trades were completed by the banks, one in EUR and the other in USD.

Swaptions were the latest addition to LCH SwapAgent, which provides processing for the trades denominated in Euros or US Dollars, including cross currency basis swaps, interest rate swaps, inflation swaps and forward rate agreements (FRAs). 

Peter Weible, TriOptima’s co-chief executive, concluded that the company’s partnership with LCH SwapAgent is an important addition to the multiple venues that are already supported by the triReduce compression service.