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Tradition extends trade compression to uncleared margin in FX

First Published 27th February 2017

Tradition and LMRKTS complete a live run, limited to Non-Deliverable Forward trades, within 8 minutes and 9 seconds. Partnership maintains separation and independence of trade execution and trading positions.

Dan Marcus, Tradition

Dan Marcus, Tradition

London - Tradition, the interdealer broker in over-the-counter commodity and financial products, has delivered an initial margin optimization in FX, after extending its partnership with LMRKTS, a compression and analytics provider.

Tradition and LMRKTS announced a strategic partnership in 2016 to handle execution and compression processing for G10 FX Forwards. Earlier this month, the two firms completed a SIMM optimization for NDFs with a group of Tradition's clients.

Borrowing from the operational processes of their G10 Cash RWA and Leverage Reductionservices, the live run incorporated exposure data from four banks, with the entire operational process, resulting in the processing of 132 sides of trades, being completed within 8 minutes and 9 seconds.

The LMRTKS offering is an analytic tool that sits on top of Tradition's existing market infrastructure. Participants set bespoke constraints and objective functions and LMRKTS determines an output that can lower systemic risk and subsequent costs. Tradition's broking business will have no information regarding the positions or exposures of the banks, but can still be employed to lower them.

Dan Marcus, Global Head of Strategy and Business Development at Tradition, comments: "We assess our partners very carefully before entering into any partnership but recognised the potential of LMRKTS's technology and analytics at an early stage. By combining Tradition's scale, connectivity and regulatory oversight in multiple jurisdictions with LMRKTS's innovative technology, we are providing a crucial tool for banks, many of whom are under pressure to meet regulatory capital requirements and manage risk exposures.