TriOptima Sees Inaugural $664B Compression Cycle For MXN Swaps

TriOptima, a post trade infrastructure provider, has announced the compression cycle for cleared Mexican Peso 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 at CME Group, having eliminated roughly $664 billion (12.5 trillion MXN) notional outstanding, per a TriOptima statement.

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The announcement is important namely as it constitutes TriOptima’s first completion of a triReduce multilateral compression cycle for cleared Mexican Peso interest rate swaps IRS). The feat was accomplished by a total of eleven CME Group IRS Clearing Clearing Clearing is a general term that simply means many different things depending on the subject and related industry. Most commonly, this refers to the reciprocal exchange between banks of checks and drafts, and the settlement of the differences, or the total of claims settled at a clearinghouse. In finance and banking, the word clearing has different meanings depending on the more specific business model. Moving checks from the bank where they were deposited to the bank on which they were drawn. Th Clearing is a general term that simply means many different things depending on the subject and related industry. Most commonly, this refers to the reciprocal exchange between banks of checks and drafts, and the settlement of the differences, or the total of claims settled at a clearinghouse. In finance and banking, the word clearing has different meanings depending on the more specific business model. Moving checks from the bank where they were deposited to the bank on which they were drawn. Th Read this Term members, which essentially encompassed upwards of 35% of the cleared MXN notional principal outstanding in CME via the cycle. The compression also marks the first such clearing round of any Latin American (LATAM) currency.

Ongoing Cycles

Since 2007, TriOptima has offered compressions for uncleared MXN trades, having already undergone a total of 20 MXN cycles to date, including the completion of the aforementioned cycle from CME Group IRS clearing members. TriOptima has also made inroads with uncleared Brazilian Real (BRL) and Colombian Peso (CLP) trades.

According to Sunil Cutinho, President of CME Clearing, in a recent statement on the compression cycle, “Mexican Peso swap clearing at CME Group is an exciting innovation we’ve delivered for our customers, and we’re pleased to work with TriOptima to deliver even greater capital efficiencies to the marketplace.”

“With bilateral swaps facing higher capital costs and the implementation of uncleared margin rules starting September 1, the combination of voluntary clearing and multilateral compression provides significant value to our clients,” he added.

“TriOptima continues to work closely with the CME Clearing to expand the range of compression services offered to their IRS clearing members and others. Eliminating trades is an important tool for improving capital efficiencies and operational processes,” explained Peter Weibel, Chief Executive Officer (CEO) of triReduce. “

Earlier this year, TriOptima also made headlines with the participation of eighteen banks in its first triReduce inflation swap compression cycle, which effectively erased $98.5 billion in inflation index swaps for the EU.