Articles tagged by TriOptima
Michael Spencer, the group CEO of Icap, claimed to be
“cautiously optimistic” about his firms’ future prospects despite heightened
uncertainty surrounding the macroeconomic outlook for the UK and the global
In a trading statement for the period April 1 2016 to ...
TriOptima announces that 11 CME Group IRS clearing members
eliminated 12.5 trillion MXN ($664 billion) notional outstanding in the first
triReduce multilateral compression cycle for cleared Mexican peso (MXN)
interest rate swaps (IRS).
Over 35% of the cleared MXN notional principal outstanding
in CME ...
As leverage requirements make FX exposures a bigger pain point for the banks, many are looking towards compression services to solve for this. Galen Stops looks at how these services work and what they could mean for the industry.
One of the responses by global regulatory bodies to the 2008 financial crisis was to require banks to hold more capital against their financial exposures, creating a bigger buffer to protect them against adverse market conditions.
Capital constraints have widely been cited as a reason for declining activity in some markets and liquidity events in other, therefore it is not surprising that compression services, whereby offsetting trades are netted off against one another to reduce the notional amount on banks’ balance sheets, have found favour amongst banks and major dealers.
Icap has appointed Guy Rowcliffe, CEO of its Reset business as head of Asia Pacific, Icap Post Trade Risk and Information Services (PTRI), which comprises a portfolio of businesses, including Reset, TriOptima, Traiana, ENSO, Abide and Icap Information..
In the newly created role, Rowcliffe will be responsible for Asia Pacific regional strategy for Icap’s PTRI business and will represent the company amongst regulators, industry bodies and committees. He will continue in his role as CEO of Reset and will report to Jenny Knott, CEO of Icap’s PTRI division.
Last week’s Icap results saw a sell of in the share price due to the under-performance of the Nex Group. Normally I wouldn't bother myself with share price movements (and I won't now to any degree) but any move that reflects market expectations for the Nex Group is interesting, not least because it could inform the price of any potential takeover bid. Nex is, in many ways, a proxy for the OTC industry so is it right that stock markets seem bearish (for this five minutes at least) over FX and OTC markets?
Per Sjöberg, CEO of TriOptima, has decided to leave the business to pursue other ventures, according to Nex Group, which owns the business.
He will be replaced by Stuart Connolly, subject to approval by Sweden’s Financial Supervisory Authority. Connolly only recently joined Nex Optimisation, which is part of Nex Group, as head of client product development in November 2016.
The firm says that since joining, Connolly has been working on the development of inter-operable data services across all Nex Optimisation businesses.
Nex Group has released its first quarterly results since the official formation of the group, and while it reports a good bounce in trading volumes around the US election in November, its CEO, Michael Spencer has flagged more “muted” volumes since.
Nex Group’s Q3 revenue was up 11% on the third quarter of 2015 and is 4% higher across the first three quarters of 2016 compared to the same period in 2015. Growth was evenly spread across the firm's Markets and trade lifecycle businesses.
Settlement services provider CLS Group and Nex Group’s TriOptima say that counterparties have eliminated $1 trillion in gross notional value from their outstanding FX forward and swap portfolios using the TriReduce CLS FX Forward Compression Service.
The service offers regular compression cycles to reduce operational, credit, and counterparty risk, and enhance capital efficiency. The firms say participation has grown steadily, with the last two cycles reducing notional principal by more than $200 billion, a trend that both companies say they expect to continue.
TriOptima has announced that 60 clients have adopted its triResolve Margin service since it launched in June 2016 as firms push to meet the new variation margin regulations coming into effect on March 1.
The new margin rules for non-cleared trades will increase the volume and complexity of margin calls. Therefore, TriOptima says that the existing fragmented and manual solutions will not be equipped to meet the new demands.
Unlike the initial margin rules that were introduced in September and are phased so that different market participants have different compliance dates, the variation margin rules will instantly affect the vast majority of firms trading OTC derivatives globally.
TriOptima has included client cleared trades in a triReduce Mexican peso compression cycle in CME Clearing for the first time.
CME Clearing and TriOptima have offered 15 compression cycles in five currencies since they started collaborating in 2016, compressing a total of $26.1 trillion in notional principal, of which $1.2 trillion is in MXN. There were 17 participants in this cycle.
Commenting on the news, Jacaranda Nava, head of derivatives trading at Banorte, says: “We are pleased to be the first Mexican bank to participate in a cleared Mexican peso compression cycle. Since we are a major participant in the derivatives market, this compression process simplifies the management of our swaps portfolio and optimises our capital requirements.”
TriOptima has added margin valuation adjustment (MVA) analytics to its triCalculate X-Value Adjustment (XVA) service.
MVA calculations determine the lifetime costs of posting initial margin as part of the pricing of an OTC derivative.
TriOptima says that the introduction of an MVA service addresses the needs of firms subject to new initial margin rules for OTC derivatives, which affect both cleared and non-cleared trades.
Pricing trades correctly is critical to ensuring accurate credit risk, counterparty exposure and funding management. While the posting of initial margin has always been a part of the central clearing process, the new rules mandating the posting of initial margin for non-cleared OTC derivative trades are being phased in from this year through 2020 and will affect a wide range of market participants.
Firms will be able to use triCalculate in order to generate independent trade and netting, set level XVA calculations, as well as risk sensitivities. They can access the platform to check the MVA implications of a trade before execution without delaying trading activity.
NEX Group has provided a trading update for investors, in which it has flagged increased spending at its Optimisation division under which umbrella the firm’s post-trade businesses operate, including TriOptima and Traiana.
The announcement, which is being read in some quarters as a profit warning, says Nex has chosen to increase its investment in the Optimisation business in the first six months to “ensure the business is best positioned to take advantage of the significant opportunities that it has identified”.
Data engineering company Duco has named Mireille Dyrberg as chief operating officer, assuming responsibility for customer success, all administrative functions, finance and legal.
Dyrberg joins from NEX Group’s TriOptima, where she was chief operating officer and previously CEO of EMEA. The appointment follows a recent $28m funding round for Duco.
Prior to joining TriOptima Dyrberg was the global business manager for Rates at Dresdner Kleinwort, before which she held a series of operations leadership roles both in London and Frankfurt.
CLS and NEX Group have announced that they are extending the triReduce CLS FX service to third parties. These institutions will participate in the same compression cycles as CLS settlement members.
Financial institutions and multinational corporations that settle in CLS Settlement through a settlement member are now able to join the compression service, benefiting from reduced counterparty exposures.
NEX’s triReduce and CLS pioneered the triReduce CLS FX service to provide risk mitigation services for the global FX market for non-cleared OTC derivative trades. The service combines CLS’s infrastructure and market connectivity with triReduce’s compression expertise.
Equities analysts at UBS have issued a research report on the merger between CME Group and NEX Group, stating that while they are confident in the potential upsides to this deal, the benefits might not start to materialise for at least a year.
Having previously downgraded CME shares from “Buy” to “Neutral”, the UBS analysts Alex Kramm and John Goode decided to maintain the current rating, with an unchanged 12-month price target of $204 per share. At the time the report was issued, CME shares were trading at $189.51.
In this week’s podcast, Colin Lambert and Galen Stops take a look at the first in-depth analysis from a broker of the CME-NEX deal and while they accept that much of what was written was already known and had been discussed there were a few nuggets of useful information in there.
On the subject of mergers and acquisitions, they also discuss the recent changes at Refinitiv and clarify their thoughts on potential M&A activity involving that firm’s Matching, Dealing and FXall businesses. Will firms be willing to splash the amount of cash required to complete such a deal? Who would be the best buyers for the combined business or elements thereof? This and more is discussed.
In a quite remarkable conclusion, they close out by expressing sympathy for a regulator – something unlikely to ever happen again – before Lambert offers listeners the benefit(?) of his experience of trading Cable with a trading recommendation as the Brexit saga continues…what could go wrong?
For the first time, trades registered in LCH’s SwapAgent service were successfully compressed in TriOptima’s multilateral USD/EUR cross-currency swap compression cycle. Using its triReduce compression service, €4.5 billion in notional of trades registered in SwapAgent were compressed. During the run, SwapAgent and non-SwapAgent trades were blended together to achieve better benefits from the compression.Compression is the process by which members can eliminate offsetting trades to reduce notional outstanding and the number of line items in a portfolio. Capital requirements such as those introduced under the Basel III leverage ratio have incentivised banks to reduce notional outstanding.
TriOptima, a provider of multilateral compression services for OTC markets, set a new record for its triReduce portfolio compression service in 2018, having compressed $250 trillion gross notional value of trades at LCH SwapClear.The firm says this record, which represents an annual increase of 31% in terms of notional value, was driven by a combination of increased participation of both dealers and their clients, increased trade submission to triReduce cycles and a wider adoption of the Trade Revision methodology, which improves compression efficiency by up to 50% by allowing a wider range of trade economics to be changed.“We are proud that another record compression year continues to help the industry achieve important capital and operational cost reductions,” says Peter Weibel, co-CEO at TriOptima.
TriOptima has launched triCalculate IM Analytics, a new tool to provide insight into the options for initial margin (IM) calculation, helps with the identification and prioritisation of in-scope counterparties and aids trading decisions to reduce future IM costs, the group says.The service supports organisations that are in-scope for Phases 4 and 5 of the IM requirements, which come into effect in 2019/20. These two phases are anticipated to pull in thousands of regional banks and buy side participants with portfolios above €750bn, and €8bn in notional value, respectively. Those coming into scope are faced with a variety of operational challenges around the calculation and exchange of IM.“With less than a year to go until the next IM tranche, regulators will expect to see tried and tested IM calculation models supported by data well in advance of the September deadline.