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LBMA and TriOptima eliminate gold interest rate swap trades

First Published 26th January 2015

London Bullion Market Association and TriOptima eliminate gold interest rate swap trades prior to 'GOFO' rate being discontinued.

Ruth Crowell, CEO, LBMA

Ruth Crowell, CEO, LBMA

"TriOptima was able to quickly and effectively help wind down the market."

New York and London - The London Bullion Market Association (LBMA) and TriOptima, provider of OTC derivatives post trade risk services, have announced that twelve market participants eliminated 99% of their outstanding gold interest rate swap (IRS) trades with each other prior to the discontinuation of the Gold Forward Offer Rate (GOFO) fixing on January 30, 2015.

Working with the London Bullion Market Association (LBMA) to offer a special triReduce termination cycle prior to the disappearance of the GOFO rate, TriOptima was able to assist the market in tearing up most of the outstanding gold interest rate swap trades that rely on the GOFO Rate to fix and reset these trades.

"LBMA members took advantage of the opportunity to participate in a triReduce compression run for gold IRS so they could terminate their portfolios before the discontinuation of the GOFO fixing rate," said Ruth Crowell, CEO of LBMA. "TriOptima was able to quickly and effectively help wind down the market."

"This was a one-off triReduce compression cycle that we ran after consultation with LBMA to help the dealers eliminate their outstanding portfolios before the end of the benchmark," said Mattias Palm, triReduce business manager. "It was an efficient way to get the trades off the books without spending a lot of time and effort to negotiate bilaterally with their counterparties. We were pleased to support LBMA members in an orderly transition."

Currently triReduce offers compression in cleared and uncleared interest rate swaps (including FRAs and Overnight Index Swaps), cross currency swaps, credit derivatives and commodity swaps. Inflation swap and FX forward compression cycles will be introduced in 2015.

The GOFO served as a benchmark for market participants to swap gold for US dollars with miners or investors.

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