‘Terminator’ initiative to slash CDS duplications

An initiative designed to reduce the number of credit default swap positions outstanding in the market is expected to reduce costs for banks but most importantly save time in future credit events. David Watts reports

In early October, a test run for removing duplicated credit default swap contracts was conducted by TriOptima, a financial technology company, with the participation of 11 banks. The process, known as a multilateral swaps cancellation, or ‘terminating’, involves each bank sending a list to TriOptima of the single-name credit default swap (CDS) and index positions it has with the other participating banks. TriOptima looks at all the lists and works out which exposures cancel – or net – one