LCH.Clearnet’s SwapClear service has eliminated over $100 trillion in notional since 1 Janurary 2015.
This net reduction in notional outstanding has been driven by an increase of compression activity by SwapClear’s members and their clients throughout the year.
SwapClear’s notional outstanding reached an all-time high of $426 trillion in November 2013. Increased compression activity over the last two years has driven down notional outstanding to its present levels.
With record volumes of cleared trades in 2015, SwapClear compressed £$323 trillion over the year, reducing the notional outstanding from almost $362 trillion at the start of the year to $254 trillion.
LCH.Clearnet believe this was achieved through its proprietary compression services, such as blended-rate, and those offered in partnership with TriOptima.
Plans to introduce compression services for inflation swaps and FX non-deliverable forwards remain in place for 2016.
Cameron Goh, head of clearing solutions of SwapClear and Listed Rates, LCH.Clearnet, said: “Eliminating over $100 trillion in net notional in a calendar year is an important milestone in our efforts to increase efficiency for the market. With the European mandate for clearing IRS fast approaching, we’ve seen a marked increase in cleared volumes at SwapClear.”
He added: “As the capital requirements under Basel III begin to bite, banks and clearing brokers are continually looking at ways to reduce exposures and drive down their clients’ and their own notional outstanding.”
