TriOptima targets swaps tear-up for mainland China and Taiwan

Swedish post-trade services group TriOptima plans to launch renminbi and new Taiwan dollar interest rate swaps (IRS) termination services in the second half of this year. The company currently offers its services across 19 currencies, including seven Asian currencies.

Peter Weibel, Singapore-based chief executive officer for TriOptima Asia-Pacific, said TriOptima had completed four termination cycles on Indian rupee interest rate swaps since launching the service in August last year. The latest one, done in March, has compressed the IRS portfolios of both local and foreign dealers.

"The termination ratio that we have achieved on all the matched rupee IRS trades over the four cycles is 90% - that is something that could not be achieved with bilateral termination," Weibel said.

TriOptima could not provide the size of the mainland China and Taiwanese interest rate swaps markets, and the Bank for International Settlements, which compiles over-the-counter derivatives statistics, does not produce figures for mainland China or Taiwan.

Last year TriOptima terminated IRS in the Australian dollar, Hong Kong dollar, rupee, yen, Korean won, New Zealand dollar and Singapore dollar worth $2 trillion in notional amount, up 70% from a year ago. Globally it had completed 30 termination cycles in those 19 currencies, totalling $13.6 trillion in notional. For the first quarter this year, TriOptima has terminated $7.3 trillion in notional globally.

The group introduced its multilateral swap-termination service called TriReduce in 2003, which cancels out swaps between at least three dealers instead of eliminating them bilaterally. It also runs compression cycles on CDS index, tranche and single-name products as well as for energy contracts.

Meanwhile, Weibel said, the group plans to open a new branch office in Tokyo by transferring senior account executive Yutaka Imanishi from Singapore. He will head the new office, which is due to open in May, along with up to four support staff members.

In Japan TriOptima has conducted terminations on CDSs on single names and iTraxx indexes since 2005.

See also: TriOptima interest rate swaps tear-ups cut risk
TriOptima reconciling 50% of collateralised OTC derivatives