How it works
Minimal effort, maximum rewards
Participants identify trades that are no longer necessary to hold in inventory for accounting, regulatory or risk reasons. Once these trades have been matched to those from other participants, triReduce produces a proposal of deals that can be terminated while maintaining an institution's predefined tolerances for changes in counterparty credit exposure, market risk, and cash payments.
triReduce's multilateral optimization process is much more powerful and effective than any bilateral attempts at termination because it has access to a greater pool of trades that can be eliminated while still respecting the preferred tolerances of participants. As many as 40,000 trades have been terminated in a single cycle.
No residual risk Unlike risk mitigation tools like
collateralization or clearing which reduce risk but leave transactions
on the books and subject to operational costs and risk and capital
charges, transactions terminated in a triReduce cycle are completely
eliminated leaving no residual risk at all.
Overview of Cycle Timeline: approximately 2 weeks
• Sign up
• Trade linking for 7 days to resolve close matches
and check regularly on updated
link results)
• Establish
tolerances for counterparty credit, market risk, and cash payments
•
Dress rehearsal: submit trade portfolio including mark to market values
•
Review results of dress rehearsal and make any adjustments in trade
population
and tolerances
• Live execution: resubmit final
trade file with new marks and final tolerances, accept
proposal,
and confirm terminated trades