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How triBalance works

simple and robust process

Utilizing the proven TriOptima optimization engine in a multilateral context, triBalance identifies an optimal risk-reducing compound transaction that offsets existing risk versus CCPs and bilateral counterparties simultaneously. The compound transaction of cleared and bilateral components (i.e., interest rate swaps, credit index and single name swaps or commodity swaps, depending on the asset class involved) is market risk and funding risk neutral for each participant.

In a triBalance cycle, participants provide TriOptima with:

  • current risk exposure against CCPs and bilateral counterparties joining the cycle
  • funding risk tolerances against bilateral counterparties and CCPs
  • forward curve and funding curve sensitivities

TriOptima generates a compound proposal which includes components that complement the netting sets (CCP/bilateral) from which the risks arise. The compound proposal will include plain vanilla trades that are cleared through the CCP and bespoke, structured bilateral trades. These trades will be based on each bank’s own valuations. To facilitate processing, TriOptima will submit the clearing-eligible trades to MarkitWire for submission to the CCP once they have been affirmed. The non-clearing eligible structured trades will be processed by each participant individually.

The proposal, reducing bilateral and CCP risk exposures, is mark-to-market and risk neutral (+/- tolerances) based on the separate discount curves for each type of ISDA CSA. triBalance transforms reactive macro hedging after a default into a proactive, recurring industry-wide process that stabilizes portfolio values before any negative events occur.  




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