Our recent blog noted that FRA compressions were $18.8 trillion of the total $97.4 trillion SDR-reported in H1 2025. The $18.8 trillion FRA compressions were dominated by the EUR currency and by the OSTTRA REST platform. I skipped further analysis to tee up a separate analysis in this blog.
Key takeaways
- Reset optimization is a service that mutually reduces reset exposures among a group of typically dealer bank participants.
- Plotting SDR-reported FRA activity allows us to paint a picture of FRA spike days from the regularly scheduled reset optimization runs from OSTTRA’s Reset service and Tullett Prebon’s Matchbook service.
- The FRA spike days in the plots strongly indicate regular reset optimization runs from both Reset and Matchbook in EUR, and reset optimization runs from Reset only in other non-LIBOR transitioned currencies.
- So far, the two vendors’ FRA spike days totaled $25.0 trillion of the total SDR-reported FRA activity of $31.1 trillion.
- The SPS activity from these two vendors will be covered in Part 2 of this blog, coming soon.
Background
Multilateral reset optimization is a service that mutually reduces reset exposures among a group of typically dealer bank participants. This can take away some of dealers’ reset management burden compared with hedging reset exposures exclusively via bilaterally initiated hedges. The services take in the reset exposures a participant wishes to reduce, and try to match opposing positions between two participants. Each matched opposing position can then be mutually reduced by proposing a mutually opposing reset hedge trade.
Without elaborating further, note that there are two well-known third-party providers: OSTTRA’s Reset service, which calls its service “basis risk optimization”; and Tullett Prebon’s Matchbook service (formerly tpMatch), which calls its service a “FRA and SPS matching platform”. The two vendors’ respective websites indicate that their runs use both FRAs and SPS as reset hedge trades.
Today, we will cover the FRA subset of their activities.
SDR reported FRA compressions
In our recent blog linked above, we showed $18.8 trillion of FRA compression (that is, with a package type reported as compression) in H1 2025. Of this number, $18.1 trillion was EUR. When I drilled into the EUR activity by date, I noticed a pattern.
Chart 1: H1 2025 US-reported EUR FRA compression trade notional volumes by platform and currency (USD billions). Source: SDRView
Chart 1 shows EUR FRA compression activity only on certain days – usually on Tuesdays (75 percent) and otherwise on Wednesdays. The activity is almost exclusively with REST (OSTTRA Reset).
Given the different scale, it is useful to chart separately the $733 billion of FRA compressions in all other currencies except EUR.
Chart 2: H1 2025 US-reported non-EUR FRA compression trade notional volumes by platform and currency (USD billions). Source: SDRView
Chart 2 shows that FRA compression activity was almost exclusively spike days from Reset, 74 percent of which were on Wednesdays, and sometimes on Thursdays or Fridays.
- SEK was the largest, with a total of $339 billion.
- CZK was next, with $154 billion.
- NOK followed, with $120 billion.
- PLN came next, with $112 billion.
- HUF and DKK were the remaining currencies, with $4.4 billion and $1.4 billion respectively.
- Bilateral (non-Reset) FRA compression volume was limited to $1.5 billion in CZK.
The FRAs generated by the two vendors are new trades that offset and reduce reset exposure for both parties. As they do not usually result in termination of trades, you may find the use of the compression package type to report this activity semantically confusing. I can only suggest that perhaps it refers to the reduction of reset exposure as “reset compression”.
Since the FRA compression trades generated are really new trades offsetting reset exposures, I looked at other new trade FRA package types for further indication of reset optimization runs.
Other FRAs package types
Chart 3: H1 2025 US-reported FRA trade notional volumes by package type and platform (USD billions). Source: SDRView
Chart 3 shows a total of $31.3 trillion of FRA activity, which, beyond our $18.8 trillion FRA compressions, includes a further $8.8 trillion “outright” trades and $3.7 trillion “package” trades. It is worth elaborating the totals for all currencies by platform (with EUR totals in parentheses):
- OSTTRA Reset – mainly REST, but also RESF – leads with $18.8 trillion compressions (of which EUR is $18.1 trillion).
- Tullet – mainly TPSE, but also IMRD, IOIR, and TPIR – is next with $8.64 trillion outrights and packages (EUR is $8.54 trillion).
- Off-platform – BILT, XOFF, and XXXX combined – is next with $1.74 trillion outrights and packages and a few compressions (EUR is $1.23 trillion).
- Tradition – mainly TSEF, but also TEUR and TCDS – is next with $1.60 trillion outrights and packages (EUR is $1.45 trillion).
- BGC (mainly BGCD, but also BGCO, GSEF, GFSO – is next with $516 billion outrights and packages (EUR is $471 billion)
- Other platforms total $51 billion (EUR is $40 billion).
Looking at daily volumes of non-compression package type EUR FRAs, we see the following.
Chart 4: H1 2025 US-reported EUR FRA outrights and packages trade notional volumes by platform (USD billions). Source: SDRView
Chart 4 shows $11.7 trillion of EUR FRA outrights and packages activity in H1 2025 – drilled down to platform and date. Unlike the earlier charts, normal FRA hedging activity is apparent, along with some prominent volume spike days from Tullett’s TPSE entity. FRA notional executed can be analyzed as follows:
- TPSE (dark green) executed $6.58 trillion on 21 spike days of between $109 billion and $717 billion notional. The spike days were 81 percent on Thursdays, and sometimes Wednesdays and Fridays.
- TPSE executed $1.90 trillion on the other 104 days, which were between $1 billion and $50 billion.
- All other D2D platform executed $1.92 trillion, which ranged between $2 billion and $122 billion each day.
- Off-platform FRAs totaled $1.23 trillion, as noted earlier.
It seems safe to conclude that the 21 TPSE spike days spikes represent EUR TP Matchbook run activity, while the same TPSE platform id is used to report bilaterally-initiated D2D FRA trading in direct competition with other D2D platforms. Since there can be bilaterally-initiated FRA trading on the spike days, the total of the TPSE spike days are an overestimate their multilateral reset optimization run activity. Subtracting the average of the non-spike days from the 21 spike day total leads to an estimate of about $6.2 trillion of EUR reset optimization runs from Matchbook.
When we look at the same data cut for non-EUR non-LIBOR transitioned currencies, there are no prominent spike days from TPSE or REST, so I skip the chart. Before you ask, it turns out that SPS hedges are used for several other currencies by both Reset and TP Matchroom. I will cover these in part 2 of this blog.
So far, the two vendors FRA spike days totaled $25.0 trillion of the total FRA activity of $31.1 trillion.
Cleared FRA volumes
We can partly corroborate what we found in SDRview but looking at CCPView FRA data. CCPs do not report platform or package type but we do get the currency and CCP breakdown. Let us chart EUR and non-EUR separately given different relative scale of activity.
Chart 5: H1 2025 CCPView EUR cleared FRA trade notional volumes (USD billions). Source: CCPView
Chart 5 shows that:
- Spike days in both Eurex and LCH correspond almost completely to the spike days seen in the SDR-reported data earlier for both Reset and TP Matchroom platform entities.
- Spike day volumes are split evenly between LCH SwapClear and Eurex.
- Much lower levels of regular daily FRA activity happen nearly every day, mostly at LCH.
Now we look at non-EUR cleared FRAs.
Chart 6: H1 2025 CCPView non-EUR cleared FRA trade notional volumes (USD billions). Source: CCPView
Chart 6 shows that:
- The eight currencies above all have regular trading volume, not necessarily every day but can be on any day, as we would expect from bilaterally initiated reset exposure hedges each day.
- Spike days occur in six non-EUR currencies in H1 2025: PLN, SEK, CZK, NOK, HUF, and DKK, usually on Wednesdays, sometimes on Thursdays or Fridays.
- The days correspond to the Reset non-EUR spike days in the SDR-reported charts earlier.
This completes part 1 of this blog on FRA and reset optimization. I expect to produce part 2, on SPS and reset optimization, within a month or two.
End note
- To recap the key takeaways, please jump back to the section near the top.
- Watch this space for part 2 of this blog, and for the promised blog on swaption compressions.
- Contact us if you are interested in using SDRView.