Before revision:  We refer to this netting operation as compression and identify feasibility and efficiency criteria, highlighting intermediation as the key element for excess levels. We show that a trade-off exists between the amount of notional that can be eliminated from the system and the conservation of original trading relationships. Third, we apply our framework to a unique and comprehensive transaction-level dataset on OTC derivatives including all firms based in the European Union.
After revision:  We refer to this netting operation as compression and reconfigurations of network structure resulting from compression activities. Using transaction-level dataset on OTC derivatives including all firms based in the European Union.