Portfolio Compression- a How To
ISDA have published market practice guidance to assist market participants with EMIR Art. 13 obligations with respect to portfolio compression. The guidance consists of two documents, both of which are works in progress:
- Step by step overview for the EMIR portfolio compression requirements
- Product feasibility matrix using the ISDA taxonomy outlining products eligible for compression
The portfolio compression working group will review the guidance bi-annually and update if necessary.
Although perhaps motivated more by capital and credit rather than regulatory requirements, portfolio compression has been one of the more successful implementations of the EMIR regulatory suite. Tri-Optima alone estimate that OTC market participants using their triReduce product have, to date, eliminated more than $612 trn. in notional principal. However, the ongoing success of the process in no way dilutes the utility of market standard guidance.