TriOptima's triReduce early termination service eliminated $13.9 trillion in interdealer notional principal outstandings in 15 interest rate swap (IRS) currencies in the first half of 2009, exceeding results for the whole of 2008.
Commitments to the international regulators to reduce IRS oustandings and renewed focus on risk reduction efforts in the area of interest rate swaps resulted in significant advancements by the dealers.
The 19 triReduce early termination cycles included AUD, CAD, CHF, EUR, GBP, HKD, INR, JPY, MXN, NOK, NZD, SEK, USD, KRW, and ZAR interest rate swaps.
The largest results were from two EUR cycles eliminating $5 trillion and two USD cycles eliminating $7.1 trillion. Total interdealer outstandings in USD interest rate swaps as reported by the BIS for June 2008 was $40 trillion, $39.4 trillion for EUR IRS. While notionals terminated in other currencies were smaller, they often contributed to significant reductions in risk-weighted assets, capital charges, and counterparty credit exposure.
"As OTC derivative dealers accelerated their interest in shedding notional outstandings and reducing their counterparty exposures in IRS, TriOptima was able to support them with 19 triReduce cycles in 15 currencies around the world," said Ulf Andersson, business manager for triReduce. "In the second half of 2009, we will be offering 21 additional cycles targeting some of the currencies already covered as well as additional currencies and transactions in LCH SwapClear. We are pleased to be able to assist our subscribers in meeting their risk management commitments."
TriOptima's triReduce cycles also eliminate interest rate swaps in CZK, HUF, PLN, SGD, and other Asian currencies. In 2008, interdealer notional principal terminations in IRS in 19 currencies totaled $13.6 trillion.