Unblocking the balance sheets

TriOptima’s triReduce platform means dealers now effectively tear up the unnecessary interest rate swaps, credit default swaps and oil swap trades clogging their balance sheets. Clive Davidson looks at how the service works

Swaps dealers have always had a problem with redundant trades. While traders try to minimise market exposure by keeping their net positions relatively flat through offsetting buy and sell positions, they are still exposed to counterparty credit risk and operational risk by holding the contracts through to maturity. This means they have to hold regulatory capital against the trades, inflating banks’ balance sheets. The obvious solution is to tear up unwanted trades. But that was

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Credit risk & modelling – Special report 2021

This Risk special report provides an insight on the challenges facing banks in measuring and mitigating credit risk in the current environment, and the strategies they are deploying to adapt to a more stringent regulatory approach.

The wild world of credit models

The Covid-19 pandemic has induced a kind of schizophrenia in loan-loss models. When the pandemic hit, banks overprovisioned for credit losses on the assumption that the economy would head south. But when government stimulus packages put wads of cash in…

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