TriOptima & LCH.Clearnet NZD Swap Cycle Eliminates $590.2 Billion

TriOptima and LCH.Clearnet have announced a sizable compression in unlinked, cleared interest rate 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, whereby eliminating 30% of New Zealand Dollar (NZD) notional outstanding in the first SwapClear NZD cycle, according to an ICAP statement.

TriOptima, ICAP’s over-the-counter (OTC) derivatives post-trade services provider, has also reported that a total of twelve participants have effectively eliminated $590.2 billion (NZD 902.3 billion) in the first NZD compression cycle, utilizing LCH.Clearnet’s SwapClear.

The cycle is significant given that the $590.2 billion constitutes approximately 30% of the NZD notional and 35% of the NZD line items outstanding in the Clearing House Clearing House A clearing house is defined as an intermediary between two parties, a buyer and seller, which helps facilitate the overall process from trade inception to settlement. Clearing houses streamline the exchange of payments, securities, or derivatives transactions.The clearing house is situated between two clearing firms who also helps reduce the risk of either member firm failing to honor their respective trade settlement obligations.Buyers and sellers enter into legally binding agreements for the e A clearing house is defined as an intermediary between two parties, a buyer and seller, which helps facilitate the overall process from trade inception to settlement. Clearing houses streamline the exchange of payments, securities, or derivatives transactions.The clearing house is situated between two clearing firms who also helps reduce the risk of either member firm failing to honor their respective trade settlement obligations.Buyers and sellers enter into legally binding agreements for the e Read this Term, according to LCH.Clearnet’s SwapClear.

At the present, both TriOptima and LCH.Clearnet’s SwapClear offer a series of compression cycles for a diverse panel of currencies, including:

• AUD (Australian dollar)
• CAD (Canadian dollar)
• CHF (Swiss franc)
• EUR (euro)
• GBP (British sterling)
• HKD (Hong Kong dollar)
• HUF (Hungarian forint)
• JPY (Japanese yen)
• NZD (New Zealand dollar)
• PLN (Polish zloty)
• SEK (Swedish kroner)
• USD (American dollar)
• ZAR (South African rand)

According to Peter Weibel, CEO of triReduce, in a recent statement on the cycle, “The significant results in this cycle reflect the effect of unlinking trades in SwapClear and the compression efficiency achieved when trades are concentrated in one book rather than dispersed across many trading books in an organization.”

“Recently we’ve seen similar results in SwapClear for South African Rand (ZAR) swaps where we eliminated 42% of the line items and 38% of the notional outstanding in SwapClear,” he added.

“The introduction of NZD clearing is a great example of how SwapClear is delivering efficiencies across the regional currency mix. The advantages to members and their clients of going well beyond the majors is clear in the marked uptick of clearing volumes,” added Marcus Robinson, Head of SwapClear, Australia in an accompanying statement.