TriOptima sees surge in interest rate swap tear-ups

Stockholm-based technology company TriOptima has eliminated $13.9 trillion in notional outstanding from the interest rate swaps market in the first half of 2009, more than the $13.6 trillion total eliminated in 2008.

TriOptima conducted 19 early termination cycles in 15 interest rate currencies through its triReduce portfolio compression service. The largest contributors to the $13.9 billion total were from two US dollar cycles, eliminating $7.1 billion, and two euro cycles cutting notional by $5 trillion.

TriOptima linked the success to industry commitments to international regulators to reduce the notional outstanding size of the interest rate swap market, and a renewed focus on risk reduction by dealers.

Nevertheless, there is still plenty of scope to reduce the notional size of the interest rate swap market. According to the Bank for International Settlements, interest rate swaps outstanding totalled $418.7 trillion at the end of 2008.

TriOptima said it will run another 21 cycles in the second half of this year.

The company announced last week it had eliminated $9 trillion in notional outstanding from the credit default swap market in the first half of the year.

See also: TriOptima tear-ups cut CDS notional by $9 trillion