TriOptima and CLS pioneered triReduce CLS FX to provide risk mitigation services for the global FX market. The service combines CLS’s infrastructure and market connectivity with our compression expertise.
triReduce CLS FX is a vital tool for enabling firms to gain regulatory and economic capital benefits while reducing direct costs to the business without changing their market risk positions. The service is available to all CLS settlement members, including prime brokers and third party clients. All currency pairs in CLS are in scope. In response to market demand we enhanced the service to combine compression with the ability to add new offsetting trades, all in the same cycle.
In addition to the triReduce CLS FX service, our clients can also take advantage of triReduce compression for NDFs (non-deliverable forwards).
We also offer compression for FX options, which have added complexity and are more expensive to maintain.
Despite the unusual market conditions in Q1, in 2020 (as at end-April), triReduce CLS FX has reduced gross notional by more than $2 trillion, up 22% year on year, for X number of participants (including non direct CLS members). Our network continues to expand and strengen helping customers seeking capital efficiencies.
Counterparties using the triReduce CLS FX forward compression service eliminated $9.1 trillion of gross notional value from their FX forward portfolios in 2019. A new record for the service, this equates to an annual increase of 71%. In Q4 alone, the service compressed $4.9 trillion of gross notional value, 153% above the previous quarterly high achieved in Q3 2018. Read the full press release
Improves the CRD4 element of the Leverage Ratio calculation under Basel III, which requires PFE add-ons for FX forward products. (1% for trades < 1 year, 5% for trades 1-5 years, and 7.5% for trades > than 5 years, per page 15 of the Basel III leverage ratio framework and disclosure requirements).
Assists firms that meet the ESMA volume thresholds to comply with the business conduct compression requirements. triReduce FX offers a platform for multiple institutions to compress regularly, thus efficiently fulfilling the ESMA requirements for many counterparties at the same time.
Enables firms to manage their gross notional exposures and redistribute counterparty exposure in order to achieve regulatory and economic capital benefits and reduce direct costs to the business.