Compliance fears slow use of synthetic swaps to cut IM

Dealers want firmer guidance on whether technique to slash margin costs contravenes clearing mandate

Back in 2012, when banks were under intense pressure to reduce the capital footprint of their swaps books, there was some buzz about a new optimisation service for non-cleared derivatives from TriOptima.

Called triBalance, the service worked by identifying webs of new overlay trades that would offset bilateral exposure within a network of banks, with the exposure then being replaced using cleared swaps. It was ingenious, but a fatal flaw meant it did not take off in the way it could have; the