Multilateral portfolio compression for FX
Mitigate risk in the FX market, gain regulatory and economic capital benefits while reducing direct costs without changing your market risk positions.
Compression and connectivity
triReduce FX allows participants to reduce net bilateral exposures by offsetting them with new trades, all in one combined cycle. The service is available to all CLS settlement members, dealers, prime brokers and CLS third-party clients. Both CLS and non-CLS currency pairs are in scope and our clients can also take advantage of triReduce compression for NDFs, FX options and precious metals. triReduce FX has reduced gross notional by more than $27 trillion, helping our customers capture capital efficiencies as our network strengthens and expands.
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Meet volume thresholds and reduce direct costs
triReduce FX offers a platform for multiple institutions to regularly compress their portfolios, efficiently fulfilling the ESMA requirements for many counterparties at the same time and allowing firms to manage gross notional exposures and redistribute counterparty exposure. Last year, counterparties using the triReduce FX forward compression service eliminated $9.1 trillion of gross notional value from their FX forward portfolios, representing a 71% annual increase.
Features and benefits
Our uniform compression process means your experience is the same regardless of the region or product.
A reliable process underpinned by a robust legal framework.
triReduce FX enables simultaneous optimization of gross notional, leverage ratio, SA-CCR and RWA
Improves leverage ratio
Improves the CRD4 element of the Leverage Ratio calculation under Basel III, which requires PFE add-ons for FX forward products.
Complies with ESMA requirements
Provides a platform for multiple institutions to compress regularly, which fulfills the ESMA requirements.
Extensive product coverage
Includes compression and optimization for all CLS currencies, non-CLS currencies, NDFs, FX options and precious metals
Trade Submission and Matching
CLS provides all eligible forward-dated trade data for participating settlement members and third-party clients to triReduce. Participants confirm the trades eligible for compression and the net positions to be offset.
Participants set risk tolerances. The triReduce team delivers a dress rehearsal result for verification.
TriOptima runs its compression algorithm on the final set of trades using the risk parameters submitted by participants and recommends a set of termination and replacement/offsetting trades for agreement.
Settlement members rescind original trades, book replacement/offsetting trades, and submit settlement instructions to CLS in the same manner they submit all other FX instructions for settlement. Participants can elect to receive replacement trades via Thomson Reuters Trade Notification Service (TRTN).
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