TriOptima & CLS Eliminate $9.1t in Compressed FX Forwards

TriOptima, part of the CME Group, announced this Tuesday that, through its cooperation with CLS, the companies jointly eliminated $9.1 trillion of gross notional value from their outstanding FX forward and swap portfolios - a new record for the triReduce CLS FX Forward Compression Service.

The triReduce CLS FX Forward Compression Service helps consolidate CLS’s robust foreign exchange (forex) infrastructure as well as its market connectivity capabilities with TriOptima’s triReduce compression product. The service was originally set up back in 2015.

The total value compressed - $9.1 trillion, is 71 percent more than what was compressed in the prior year. In the final quarter of 2014 alone, the service compressed $4.9 trillion of gross notional value. This represents an increase of 153 percent above the next highest quarter - Q3 of 2018.

TriOptima: Increased year-end activity drove performance

According to a press release published by TriOptima, the new record was driven by increased participation from the Prime Broker Prime Broker Prime brokers are the designation given to individuals handling a package of services offered by investment banks, wealth management firms, and securities dealers to hedge funds which need the ability to borrow securities and cash in order to be able to invest on a netted basis and achieve an absolute return.There are two types of prime brokers - bank and non-bank corporations. Traditionally major global investment banks have been the predominant players in the space, however recent years have p Prime brokers are the designation given to individuals handling a package of services offered by investment banks, wealth management firms, and securities dealers to hedge funds which need the ability to borrow securities and cash in order to be able to invest on a netted basis and achieve an absolute return.There are two types of prime brokers - bank and non-bank corporations. Traditionally major global investment banks have been the predominant players in the space, however recent years have p Read this Term and executing broker community. Furthermore, the increased year-end activity also contributed to the solid performance.

Speaking on the results, Guy Rowcliffe, Global Head of Optimization Services and TriOptima, CME Group, said in the release: “As FX Forwards FX Forwards FX forwards are contracts occurring within the foreign exchange market where market participants lock in exchange rates for the buying or selling of a currency on a predetermined date. Sometimes known as currency forwards, FX forwards can be thought of as a customizable hedging approach.In this sense, upfront margin payments are not required and all contracts are over-the-counter (OTC) due to the decentralized nature of the foreign exchange market. Popularity of FX ForwardsFX forwards are popula FX forwards are contracts occurring within the foreign exchange market where market participants lock in exchange rates for the buying or selling of a currency on a predetermined date. Sometimes known as currency forwards, FX forwards can be thought of as a customizable hedging approach.In this sense, upfront margin payments are not required and all contracts are over-the-counter (OTC) due to the decentralized nature of the foreign exchange market. Popularity of FX ForwardsFX forwards are popula Read this Term volumes continue to grow, and in response to capital rule changes and increased regulatory interest in FX compression, clients have a greater need for flexible risk mitigation services to achieve capital and operational efficiencies. We are pleased with this new milestone for FX forwards compression and look forward to extending our service offering in 2020."

“The increase in notional reductions seen in 2019 demonstrates the value triReduce CLS FX continues to deliver for our clients,” added Alan Marquard, Chief Business Development Officer, CLS. “It enables them to further improve their capital efficiencies and significantly reduce risk, while contributing to the smooth and efficient running of the FX market.”