Portfolio Compression Service

This Issue in United States

Concept of Portfolio Compression Service in Futures Trading

In this context of financial law, the following is a definition of Portfolio Compression Service: A service that helps market participants identify positions in a portfolio of OTC derivatives that are redundant after netting across a pool of other portfolios of OTC derivatives. After identifying redundant trades, Portfolio Compression Service providers will suggest ways to substitute overlapping and redundant positions for a smaller position in notional terms that provides the same net risk exposure. In general, portfolio compression services are intended to reduce the outstanding trade count and outstanding gross notional value of two or more market participants’ portfolios. See Risk Mitigation Service.