How to Run a Portfolio Compression Cycle

Diana Higgins

"The secret of getting ahead is getting started."
Mark Twain

PREPARATION FOR A PORTFOLIO COMPRESSION CYCLE

This chapter aims to provide project managers and members of compressions teams with a methodology to successfully execute a compression. Each section will explain high-level decisions, such as defining a compression cycle, planning the time required to run a cycle and deciding on the people that need to participate in the compression team. It also describes in detail each of the actions required to complete a compression cycle.

Compressions are one of those tasks where representatives from different departments in a company need to work together. After reading this chapter, each member of a team that participates in a compression should be able to understand their role and the role of other team members. Also, they should be aware of the key decisions that need to be made by the company and, in particular, how to define tolerances. Furthermore, the reader would be able to understand the actions required to interact with the counterparty in a bilateral compression or with the arranger in a multilateral compression.

This chapter summarises ISDA’s guidance for high