OSTTRA Leverages Vanilla Swaps to Revolutionize Portfolio Rebalancing in 2025

Wall Street's latest 'innovation' is as vanilla as it gets—but it works. OSTTRA just cracked the code on smoother portfolio rebalancing using plain-vanilla swaps. No complex derivatives, no overpriced structured products—just straightforward efficiency.

How It Works

Forget convoluted strategies. OSTTRA's approach leans into simplicity: vanilla interest rate swaps to rebalance exposure fast. No hedging gymnastics, no liquidity nightmares—just precise, cost-effective adjustments.

Why Traders Care

Speed wins. In a market where microseconds decide profits, OSTTRA's method slashes operational friction. Bonus? It sidesteps the usual counterparty headaches—because who has time for credit risk drama?

The Bottom Line

Another proof that finance's best solutions are often the simplest. Now if only the industry applied that logic to fees.

OSTTRA services have been granted exemptions from mandatory clearing obligations under EMIR by the European Securities and Markets Authority (ESMA) and from the public reporting requirements under MiFIR by the UK’s Financial Conduct Authority (FCA).

OSTTRA triBalance is currently the only provider in the EU approved to carry out post-trade risk reduction services under a clearing exemption, confirmed by ESMA on 16 June 2025. Additionally, the FCA’s exemption from the Derivatives Trading Obligation (DTO), post trade transparency reporting and best execution requirement took effect on 30 June 2025, removing a further obligation from UK based users of OSTTRA’s Post Trade Risk Reduction (PTRR) services. EU based users already benefitted from the equivalent exemptions that came into force with EU MiFIR 3 in 2024.

The clearing obligation was designed to reduce systemic risk by mandating central clearing for certain derivatives, however, the EMIR clearing obligation prevented the use of vanilla swaps for portfolio rebalancing. With the exemption now in place, the OSTTRA service can better optimise risk reduction through a more liquid and widely traded contract, marking a significant milestone in OSTTRA’s efforts to expand the use of post trade risk reduction services.

Previously, swaptions were used as a proxy, but these more complex and costly instruments limited the wider adoption of portfolio rebalancing. This reduced the broader benefits of multilateral participation, preventing widespread reduction of counterparty risk in the financial system. The exemptions from ESMA will better enable OSTTRA to support a wider set of market participants.

A similar decision from the Bank of England’s Prudential Regulation Authority (PRA) is under consideration; another key step towards enabling broader market participation. Work is also underway to facilitate similar exemptions from the CFTC and SEC for equivalent rules in the US under the Dodd-Frank Act, which will complete the regulatory alignment needed to fully support multilateral risk reduction and enhanced liquidity.

“This is an important development for our clients, who rely on our services to reduce risk in their portfolios,” commented Kirston Winters, Head of Legal, Risk, Compliance and Government and Regulatory Affairs at OSTTRA. “These exemptions allow us to deliver more efficient and accessible optimisation services, reducing operational complexity and enabling broader participation in multilateral risk reduction – ultimately strengthening the resilience of the financial system. We’re working closely with other regulators to provide additional exemptions, which will further enable firms to use post trade risk reduction services.”

Source: OSTTRA