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NASDAQ CLEARING COMPLETES FIRST ROUND OF OTC PORTFOLIO COMPRESSION SERVICE

Published

  • 288 billion SEK in notional eliminated in Nasdaq Clearing’s first compression run for Interest Rate Swaps (IRS)
  • In connection with the compression, backloading into Nasdaq Clearing (registering of historical trades to clearing) was commenced for part of participating members’ SEK IRS portfolios

Stockholm April 18, 2016, Nasdaq announced today that a compression session in collaboration with TriOptima and several Nordic banks has been carried out for the majority of the Nordic banks. Five clearing members eliminated 288 billion SEK in the first compression cycle for SEK interest rate swaps (IRS) at Nasdaq Clearing.

Compression of an OTC portfolio aims to achieve what netting does for a standard futures portfolio, i.e. reduce the gross exposure by taking out any contract that can be off-set by an opposite trade. Compression eliminates trades between dealers where the risks of those trades offset each other, according to the parameters agreed by the participants.

“This marks the start of a new functionality driven by member demand. I’m very pleased to offer our members this service”, said Johan Rudén, Senior Vice President and Head of Nordic Fixed Income at Nasdaq, “With the new capital requirements under Basel III, banks and clearing brokers need to look for additional ways to reduce exposures as well as notional outstanding on their balance sheets.”

“We are very happy with the outcome of the first Nasdaq compression both in terms of the number of trades, nominal amounts, and percentage of trades unwound, but also with respect to the smooth and problem-free execution of the entire process”, said Carl Mitchell, Head of Rates at SEB.

“It is important for Danske Bank Markets to support Nasdaq and the local market place”, said Joakim Anjou, Head of Markets at Danske Bank. “In the world of new capital requirements it is of great importance for the Scandinavian market place to have an effective compression service in order to minimize capital cost. The compression process has run smoothly and we are pleased with the cooperation with Nasdaq.”

“The compression functionality makes Nasdaq a competitive CCP in a cost and capital constraint swap market”, said Jan-Peter Larsson, Head of Markets at Swedbank.

Open interest in cleared SEK IRS volumes amounted to 725 billion SEK prior to the compression cycle.

Nasdaq’s compression session in April 2016 is the first compression session in a series and will continue twice a year going forward.

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Cautionary Note Regarding Forward-Looking Statements

The matters described herein contain forward-looking statements that are made under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, statements about Nasdaq and its products and offerings. We caution that these statements are not guarantees of future performance. Actual results may differ materially from those expressed or implied in the forward-looking statements. Forward-looking statements involve a number of risks, uncertainties or other factors beyond Nasdaq's control. These factors include, but are not limited to factors detailed in Nasdaq's annual report on Form 10-K, and periodic reports filed with the U.S. Securities and Exchange Commission. We undertake no obligation to release any revisions to any forward-looking statements.

Nasdaq Copenhagen, Nasdaq Helsinki, Nasdaq Iceland, Nasdaq Riga, Nasdaq Stockholm, Nasdaq Tallinn, Nasdaq Vilnius, Nasdaq Clearing and Nasdaq Broker Services are respectively brand names for the regulated markets of Nasdaq Copenhagen A/S, Nasdaq Helsinki Ltd., Nasdaq Iceland hf., Nasdaq Riga, AS, Nasdaq Stockholm AB, Nasdaq Tallinn AS, AB Nasdaq Vilnius, Nasdaq Clearing AB, Nasdaq Broker Services AB. Nasdaq Nordic represents the common offering by Nasdaq Copenhagen, Nasdaq Helsinki, Nasdaq Iceland and Nasdaq Stockholm. Nasdaq Baltic represents the common offering by Nasdaq Tallinn, Nasdaq Riga and Nasdaq Vilnius.

Media Relations Contact:
Christina Malmberg Hägerstrand
+46 8 405 65 83
christina.hagerstrand@nasdaq.com

 

 

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