CompressRail

Confidential multilateral portfolio compression for OTC derivatives, built on the Canton Network.

CompressRail lets a group of derivatives counterparties tear up offsetting bilateral trades and atomically redistribute counterparty exposure. Economic terms are encrypted on the ledger, and the operator party is not a decryption recipient; see Privacy model and boundary for what is exposed.

Status: early development. Runs on Canton DevNet. Not audited. Not for production use.

The claim

The operator party coordinated and committed an atomic multilateral compression cycle without being a decryption recipient of any participant's terms.

Everything else in this documentation exists to make that precise, falsifiable, and bounded. In this build the matching runs with all inputs in one place; private matching and reduced execution visibility are separate roadmap items.

The problem

Multilateral portfolio compression reduces the gross notional and the trapped initial margin sitting in offsetting OTC derivatives trades. Industry estimates put regulatory initial margin across non-cleared and cleared derivatives in the hundreds of billions of dollars, and the funding cost of carrying it runs into the billions per year.

The mechanism that delivers compression carries a structural cost of its own. To find the offsetting cycle, every participant has to submit its trade population, valuations, risk values and tolerances to a central operator that computes the result — so that operator holds every participant's book. That is a documented property of how the services work, not an inference.

Whether it is also what keeps firms away is a separate question, and one we do not claim to have answered: public sources do not attribute low participation to it, and buy-side and regional-bank participation in existing services is documented. What CompressRail removes is the requirement itself. Whether removing it changes who participates is the hypothesis being tested, not a result being reported.

What CompressRail does

CompressRail moves the trust boundary from the operator to the protocol. The operator coordinates a compression cycle but is architecturally unable to read any participant's economic terms. Each participant verifies, on the node that hosts it, that its post-cycle risk stays within its declared tolerance, and authorizes only its own legs. The whole multilateral rebalance commits atomically — every leg or none. A participant can grant its home regulator a read-only view scoped to that participant's contracts alone.

Read Privacy model and boundary for the precise claim, then Architecture for how it is built, Run guide to run it yourself, and Demo guide to see it live.