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OSTTRA TriOptima launches credit optimisation service allowing banks to reduce cleared risk

LONDON, 17th November 2021 – OSTTRA TriOptima, a leading infrastructure service that lowers costs and mitigates risk in OTC derivatives markets, today announced a new triBalance credit optimisation rebalancing initiative that reduces risk in multiple central counterparties (CCPs), including LCH CDSClear and ICE Clear concurrently. 

This new service, which has already allowed 12 participants to eliminate more than $475bn of gross notional value from cleared Index Credit Default Swaps (CDS), enables investment banks such as Goldman Sachs and J.P. Morgan to simultaneously optimise multiple risk measures including  notional, initial margin (IM) and capital exposures on a multilateral basis. Previously, banks would have had to reach out to, and negotiate with, counterparties individually to mitigate the same type of risk. The addition of credit to TriOptima’s multilateral network uniquely positions the service to optimise across all derivative asset classes, FX, rates, commodities, equities and credit derivatives.

We appreciate triBalance for establishing a framework to optimise notional and capital for cleared credit products and look forward to future offerings targeting capital & IM reduction in the credit and mortgages space in the future, said Kaushik Murali, Global Head of Index Trading at Goldman Sachs.

“Rebalancing credit risks across ICE Clear and LCH CDSClear is an important risk-management task and solutions to support dealers to achieve this will reduce market fragmentation and help deliver results for clients. Through a successful first session TriOptima: triBalance Credit has helped us to reduce initial margin and simplify positions, enabling us to continue delivering a best-in-class service”, said Aymeric Paillat, Head of J.P. Morgan Global Credit Index Trading.

“We welcome initiatives like triBalance Credit that help our members manage their gross notional and derived capital exposure across CCPs.” added Frank Soussan, Global Head of CDSClear, LCH.

“The risk reductions achieved, demonstrate the value that this triBalance Credit initiative is already delivering for our clients. It enables financial institutions to achieve further capital efficiencies and reduce funding costs associated with margin requirements, while contributing to the smooth and efficient running of the credit derivatives market,” concluded Erik Petri, Head of triBalance at TriOptima.

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