CLS and TriOptima Eliminate $1 Trillion in Compressed FX Forwards, Swaps

CLS Group, a provider of risk mitigation and operational services, has teamed up with over-the-counter (OTC) derivatives specialist TriOptima, and jointly eliminated upwards of $1 trillion in gross notional value from their outstanding FX forward and swap portfolios, as part of the triReduce CLS FX Forward Compression Service.

The triReduce CLS Forward FX Compression Service helps consolidate CLS’s robust foreign exchange (FX) infrastructure as well as its market connectivity capabilities with TriOptima’s triReduce compression product – a joint partnership was originally established back in October 2015.

Consequently, the end result is the capacity for counterparties to better reduce the gross notionals of their respective outstanding portfolios absent of any changes or schisms across their market positions. Since late 2015, the service has been completing successful compression cycles for FX forwards and Swaps Swaps Swaps can be defined as a derivate contact composed of two parties that exchange to cash flow between two separate financial instruments.They are generally divided into two categories. This includes contingent claims (options) and forward claims, where forward contracts, swaps, and exchange-traded funds (ETFs) are exchanged. Commodity price, equity price, interest rate, and foreign exchange rate are common variables used as one of the cash flows in swaps upon initiation. Different Types of Swaps Swaps can be defined as a derivate contact composed of two parties that exchange to cash flow between two separate financial instruments.They are generally divided into two categories. This includes contingent claims (options) and forward claims, where forward contracts, swaps, and exchange-traded funds (ETFs) are exchanged. Commodity price, equity price, interest rate, and foreign exchange rate are common variables used as one of the cash flows in swaps upon initiation. Different Types of Swaps Read this Term transactions.

Over the past year and a half, participation in the compression cycles has also seen steady growth, with the two most recent rounds reducing notional principal by more than $200 billion. Moreover, TriOptima is slated to roll out an upgraded service that will likely be available in 2017 – this will help foster additional net exposure reduction by adding new, offsetting trades.

Such an upgrade will be important for prime brokers and dealers, as it can help achieve significant risk reduction and manage their Leverage Leverage In financial trading, leverage is a loan supplied by a broker, which facilitates a trader in being able to control a relatively large amount of money with a significantly lesser initial investment. Leverage therefore allows traders to make a much greater return on investment compared to trading without any leverage. Traders seek to make a profit from movements in financial markets, such as stocks and currencies.Trading without any leverage would greatly diminish the potential rewards, so traders In financial trading, leverage is a loan supplied by a broker, which facilitates a trader in being able to control a relatively large amount of money with a significantly lesser initial investment. Leverage therefore allows traders to make a much greater return on investment compared to trading without any leverage. Traders seek to make a profit from movements in financial markets, such as stocks and currencies.Trading without any leverage would greatly diminish the potential rewards, so traders Read this Term ratios effectively. According to David Puth, CEO of CLS, in a recent statement on the compression cycles: “This is a significant milestone for the compression service which has shown substantial growth over the last year, both in the number of participating banks and in the amount of notional reduced.”

“The enhancement to the service will create additional value for our clients, enabling them to further improve their leverage ratios and significantly reduce risk in the FX market,” he added.

“This new service enhancement is a great win for our clients who will now be able to both compress trades and offset exposure with new trades where required, all in the same cycle,” noted Peter Weibel, CEO of triReduce.