There are many ways to reduce a portfolio and simply it for operational and economic purposes

An announcment today from SwapClear has a variety of interesting notes on methods (existing and planned) to modify portfolios of OTC trades. The new announcement regards a multi-lateral option in additon to their "solo" and "duo" options, explained in this PDF brochure (and attached below).

• Solo: One party acting alone to net trades, which will have no effect on any other party
• Duo: Two parties netting trades between themselves
• Multi: Many parties netting trades

Later in 2014 some additional options come along which start moving beyond simpler mechanical netting of largely identical trades:

• Future cashflow netting: looking at the forward cashflow schedule of trades to find offsetting and matching settlement schedules
• Blended-rate compression: combining trades with similar or identical settlement schedules but with different rates on the trade itself (i.e. the fixed leg rate)
• Unlinked trades: Refer to the PDF

All these are in addition to the TriOptima service which the industry uses. The source is this announcement about multi-lateral compression.

In terms of innovation and competition in Clearing – does anyone know if any other CCP has comparable offerings? This moves SwapClear ahead from a service point of view, but interesting to note that the net risk represented by these trades and I assume the corresponding Initial Margin amount will remain more or less unchanged, I think. Anyone with a Risk background want to comment?