Compressing Financial Derivatives, the Role of Clearing and Emerging Post-Trade Management Solutions

Diana Higgins

'We cannot solve our problems with the same thinking we used when we created them.”
Albert Einstein

Somehow, regulation has come to involve commodities. OTC commodities statistics show that they are just a drop in the ocean of interest rate swaps and other financial derivatives that many energy professionals have only just about heard of. Not surprisingly then, vendors and clearinghouses have responded by offering solutions to cater for the requirements of the largest markets for these services. In fact, vendor solutions were adapted to commodities.

This chapter introduces the reader to compressions in financial products, and includes a summary of research into public sources in relation to the development of these types of compressions. It also provides examples and comments from the author ’s interview with Mattias Palm, TriOptima’s expert in compressions. In addition, it will offer an overview of market participants that have been active in compressions, those who joined in 2013–14 and those who have made shy announcements (such as clearers) but that potentially may become the key players in years to come. There is also a quick introduction to the reasons behind why