SwapClear hopes to crush notionals by $600trn

New approach to compression could help swaps escape leverage ratio pressure

Compression improvements could shrink size of OTC derivatives market

The swaps market may be about to wriggle out of the leverage ratio's stranglehold, thanks in part to a radical new approach to trade compression that is being rolled out at LCH.Clearnet. The clearing house is aiming to slash the outstanding gross notional of interest rate swaps at its SwapClear service by $600 trillion over 2013 and 2014 – roughly equivalent to the current size of the entire rates derivatives market.

A reduction in notionals would relieve capital pressures on the big dealers

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