CLS and NEX Extending triReduce Compression Service to Third Parties

CLS and NEX have jointly extended the triReduce CLS FX service to third parties, greatly enhancing participation. The joint effort reflects an ongoing bid to expand participation for third parties amidst a strong demand for compression of FX forwards and swaps.

As a market infrastructure group delivering settlement, processing, and data solutions, CLS has seen its settlement service grow over the past year. Together with NEX, the triReduce CLS FX service compressed $6 trillion notional to date. Additionally, the service has also signed six additional banks in the last six months alone, eying further growth.

Alan Marquard, Chief Strategy and Development Officer at CLS, commented: “The compression service has achieved impressive growth over the past year, and we continue to see high levels of participation. It has always been our aim to extend the service to third parties, and there is strong demand for compression of FX forwards and swaps."

The extension of the triReduce CLS FX service to third parties is a big development for both groups, given the increased scope of use. Third parties will now be able to participate in the same compression cycles as CLS settlement members, pending a compression proposal. The benefits are manifold, including reduced counterparty exposures and operational risk mitigation.

NEX’s triReduce and CLS originally developed the triReduce CLS FX service to help provide risk mitigation services for the global FX market for non-cleared OTC derivative trades. Overall, the service combines CLS’s infrastructure and market connectivity with triReduce’s compression expertise.

“Working with NEX, we are pleased to bring the benefits of compression to a wider community. In particular, banks impacted by Basel III Regulation Regulation Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority ( Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority ( Read this Term will benefit from effective management of 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 and significant risk reduction,” explained Marquard.

Since the service’s launch, it has compressed over $6 trillion notional, having secured a growing user base. Several factors have driven the service’s growth. FX market participants continue to seek means to reduce their risks and banks have grown to understand the benefit of reducing their leverage ratio in connection with the Basel III standards.

Peter Weibel, CEO of triReduce, reiterated: “Over the last six months, FX compression volumes have more than doubled due to strong interest from banks participating not only with their house accounts but also with their prime brokerage businesses. We are delighted to work closely with CLS to offer the compression service now to third parties and expand the pool of compression opportunities for the industry.”