Compression eases capital, risk bottlenecks amid CNH swap boom
Dealers say multilateral compression for yuan cross-currency swaps can increase trading capacity
Dealers say that the introduction of multilateral compression for US dollar/CNH cross-currency swaps at Hong Kong Exchanges and Clearing OTC Clear will help to relieve growing regulatory capital, margin and settlement limit pressures amid a recent boom in trading of the offshore renminbi contracts.
A first run, involving five financial institutions, was conducted by HKEX OTCC using post-trade vendor Osttra’s triReduce service in late August, with a total of $5.8 billion notional compressed. A
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