An innovative on-demand compression service designed to identify and compress gross notional delivering significant reductions in capital requirements
The major Clearing Houses operate ‘risk free’ compression services to help firms reduce the number of open positions and reduce gross notional. ClearCompress does not try to replicate this but augments existing market solutions by capturing and compressing the remaining trade population; those with small date mismatches that do not get compressed and continue to attract significant capital charges.
Using innovative bi-lateral compression to remove trades across mismatched cash flow dates, ClearCompress reduces gross notional across the portfolio and shrinks the size of the remaining trade population. Light touch, configurable and independent, ClearCompress can be tailored to enable compression for clients according to their timescale, frequency and portfolio scope delivering clear and quantifiable benefits at a reasonable cost.
ClearCompress mediates between all participants to agree risk and match parameters as well as timelines for execution. All parties upload their data securely using standard Clearing House reports. No data is shared directly with other participants and no internal development work is required.
ClearCompress matches offsetting positions between the trade populations and identifies possible offsets. The results of this matching process are then shared with each participant so they can assess the benefits available.
ClearCompress runs forward-based risk on the offset trades and proposes hedges to flatten this whilst also taking into account reset risk. The result brings the overall trade package to a net zero NPV whilst keeping risk flat at a net delta and by bucket level. Acting as an independent party both sides can be comfortable of the neutrality of ClearCompress in proposing the risk reinstatement hedges.