NEW YORK & LONDON--(EON: Enhanced Online News)--TriOptima announces that 13 banks and energy houses have eliminated more than 4300 power and gas swaps and forwards with a combined notional principal value of €8.4 billion. Participants included: Alpiq, Bank of America Merrill Lynch, BKW Energie, Citigroup Global Markets Ltd, EnBW Trading, Iberdrola, JP Morgan, ScottishPower, and Société Générale.
“This is the largest compression cycle we have seen so far in the energy markets and is a clear sign that the sector wants to maximize the risk reduction benefits of eliminating trades”
The terminated trades covered 182 million MWh in European power, 25 million MWh in European natural gas and 320 million Therms of UK natural gas.
Spurred by recently-implemented EMIR regulations around clearing thresholds as well as the implications of the new leverage ratio and Basel III capital requirements, market participants have been eager to eliminate as much gross notional exposure as possible in their OTC derivative portfolios.
“This is the largest compression cycle we have seen so far in the energy markets and is a clear sign that the sector wants to maximize the risk reduction benefits of eliminating trades,” said Mattias Palm, TriOptima’s Business Manager for commodities. “We are pleased that we were able to support the market as it moves to manage its exposures, and we expect interest in eliminating all types of commodity trades will continue to grow.”
The trades terminated included both physical and financial power and natural gas products, and spanned many European countries:
- Power: Amprion (Germany), CEPS (Czech Republic), NGrid (UK), MAVIR (Hungary), OMEL (Spain), PUN (Italy), RTE (France), SwissGrid (Switzerland), TenneT (Netherlands), and TERNA (Italy),
- Natural Gas: Baumgarten (Austria), Gaspool (Germany), NBP (UK), NCG (Germany), PEG (France), and TTF (Netherlands).
TriOptima is the award-winning provider of post trade risk management services and infrastructure for OTC derivatives. Focused on reducing costs, eliminating operational and credit risk, improving counterparty exposure management, and reducing systemic risk, TriOptima offers a range of services:
triReduce to reduce swap inventory and counterparty risk; triResolve to reconcile OTC derivative portfolios and manage disputes; triBalance to manage cleared and bilateral counterparty risk; and triQuantify to measure and analyze counterparty risk.
TriOptima, an ICAP Group company, maintains offices in London, New York, Singapore, Stockholm, and Tokyo.