SGX introduces portfolio compression service

S$25 billion notional of IRS trades were terminated.

Singapore Exchange said it has successfully completed its first compression of cleared Singapore dollar interest rate swaps held by Clearing Members.

According to SGX, portfolio compression involves the elimination of trades whilst keeping the market exposure of the Clearing Member almost unchanged.

“This reduces the quantum of outstanding positions of participating Members in terms of number and notional size of cleared trades, thereby enhancing operational efficiency for Members,” explained SGX in an announcement.

Meanwhile Mr Muthukrishnan Ramaswami, President of SGX, said they are pleased to work with TriOptima in offering portfolio compression service to complement their OTC Interest Rate Swaps clearing service.

“The new SGX trade compression service enables market participants to better manage outstanding IRS notional and transactions at the Clearing House. Through it, risk-neutral cleared trades are eliminated and this helps improve operational efficiency for both the Clearing Members and Clearing House,” said Mr David Griffith, Chief Operating Officer, FX, Rates and Credit, Standard Chartered Bank.

Mr Griffith is also the Chairman of SGX’s OTC Member Steering Committee.