Compression

Blended Rate Compression Just Got Even Easier


SwapClear's trade compression offering delivers significant capital and operational efficiencies, while protecting the integrity of the marketplace. Its far-reaching adoption has resulted in a reduction of more than $200 trillion notional outstanding since 2013, with capital savings for the industry estimated at around $25 billion.

Compression allows members and clients to combine or offset trades with compatible economic characteristics, resulting in a reduction in notional outstanding. This simplifies portfolio management by allowing members and clients to reduce the number of individual positions in the portfolio, while maintaining the same risk profile. As a result, fewer reconciliations are needed, delivering more efficient portfolio transfers and, in some cases, lower capital requirements for financial institutions under Basel III.

SwapClear offers three flavors of compression: Solo, Multi and Blended Rate. We also offer SMART for Compression, an extension of its award-winning margin approximation tool.

In 2016, we extended the Solo compression offering to include inflation swaps, enabling members and clients to take advantage of compression across the full range of SwapClear products.

Benefits of Compression

Your Compression Choices

SwapClear provides a number of different flavours of compression, allowing members and clients to choose what, when and how they compress their trades.

  • SOLO COMPRESSION

    Enables a party to tear up its eligible trades, regardless of counterparty. It now includes blended rate compression, which allows any trade to be compressed, regardless of its interest rate, as long as the remaining payment dates are identical.
  • MULTI COMPRESSION

    Enables a party to tear up trades with two or more members. Multilateral risk constrained compression is available for members and clients through Approved Compression Service Providers.
  • BLENDED RATE

    Blended rate compression replaces a number of individual trades with one risk replacement trade, expanding the universe of trades eligible for compression and significantly increasing the opportunity for both members and buy-side firms to generate even more efficiencies.

Blended Rate - How it works

Blended rate compression replaces a number of individual trades with one risk replacement trade, as demonstrated in the example below.

Blended Rate Example

SMART for Compression

SwapClear has harnessed its award-winning margin simulation technology, SMART, to provide similar capabilities for compression. This will enable buy-side firms to more accurately and quickly determine their compression options.