Markit

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See also ***House derivatives 2009***, CDS clearing, CDS confirmation, CFTC, Credit default swap, Derivatives and Regulatory harmonization

Contents

Overview

Markit is a leading provider of data and pricing products and services that are used globally by more than 250 banks to help them monitor risk, mark-to-market and develop accurate forecasting models. Over 50% of these firms access our benchmark CDS and loans pricing which are both supported by 5 years of reliable historical data.

  • Markit BOAT
  • Markit Bonds
  • Markit CDS Pricing
  • Markit Equities
  • Markit European ABS Pricing
  • Markit Indices
  • Markit LCDS Pricing
  • Markit Loans Pricing
  • Markit MSA
  • Markit PMIs
  • Markit RED
  • Markit Quotes
  • Markit Sameday
  • Markit Structured Finance
  • Markit WSOData

General Atlantic makes $250 million investment in Markit

The 7.5% holding puts a valuation on Markit of approximately $3 billion and represents a shift in investment strategy by General Atlantic which has in the past favoured investments in exchange-based trading systems.

Initially established to deliver pricing and valuation services for over the counter derivatives, Markit has more recently expanded its business into the post-trade processing arena. Back office automation is viewed as a major growth market for the future as capital markets participants are pressured by politicians and regulators into taking steps to reduce the systemic risks posed by the threat of counterparty default.

Bill Ford, CEO of General Atlantic, says: "As a financial information services industry leader, Markit is well-positioned to deliver the independent, high quality products and services that market participants need."

Ford, who will personally take a seat on Markit's board of directors, says General Atlantic will assist Markit actively in developing its growth strategy further and executing "value-creating acquisitions".

Lance Uggla, CEO of Markit, says: "GA is one of the leading investment firms in financial services and having them as a partner is an affirmation of our business model and enhances the opportunity we have for building long-term value. This significant investment marks an important milestone in Markit's strategy and evolution, and we will benefit immensely from GA's support and Bill Ford's participation on our board."

General Atlantic's investment will also go some way to pacifying regulatory concern over the degree of influence exerted by major derivatives dealers in Markit's shareholder base, an issue which formed part of a US Justice Department probe into the credit default swaps market in July.

Markit data and clearing

The CME Group clearing could increase transparency in the market because the company is not restricted from distributing prices for the trades it processes.

“We are not working with Markit” and will internally create prices at CME Group and with CMA Datavision, which CME Group owns, said Laurent Paulhac, managing director of OTC products and services for CME Group.

A Justice Department investigation is examining whether London-based Markit Group Ltd., which provides derivative and bond data to more than 1,500 customers, sought to retain ownership of the pricing data that is created when trades are processed by a clearinghouse, a person familiar with the probe said in August.

Markit Indexes

Markit owns indexes and price data for credit swaps contracts and releases trading prices at the end of the day. Prices recorded from the trades processed by Intercontinental Exchange’s ICE Trust clearinghouse are available only through Markit, according to ICE Trust’s Web site.

A Markit spokesman didn’t immediately return a call for comment.

Bloomberg LP, the owner of Bloomberg News, competes with Markit in selling information to the financial-services industry. Markit is among the contributors of data that appears on the Bloomberg terminal.

Markit target of US anti-trust inquiry

Federal antitrust officials have opened a broad inquiry into the practices of the companies that serve as clearinghouses for trades of derivative instruments and are looking in particular at whether any companies have improperly used inside information about trades to profit, officials said on Wednesday.

Markit Group Holdings, a data warehouse controlled by several big banks, disclosed on Tuesday that it had been notified by antitrust officials of an inquiry into the “credit derivatives markets and related markets” and that it would “provide any information requested.”

On Wednesday the Justice Department issued a statement confirming the investigation and said that it would be looking to see whether any improper practices had occurred on an industrywide basis.

“The antitrust division is investigating the possibility of anticompetitive practices in the credit derivatives clearing, trading and information services industries,” said Laura E. Sweeney, a Justice Department spokeswoman.

Credit-default swaps, derivative instruments that are used as a kind of insurance against the possible default of a mortgage-backed securities, were a central cause of the near collapse of the American International Group, an issuer and heavy trader of such instruments. The instruments were marketed as a way to limit and shift risk. But instead they wound up spreading the crisis like a virus.

Congress is considering a proposal by the Obama administration and regulators at the Commodity Futures Trading Commission and the Securities and Exchange Commission to more tightly regulate the dealers who trade such derivatives, along with the underlying instruments themselves. Concerned about closer scrutiny from regulators, the industry has proposed its own set of voluntary rules.

Markit is the dominant provider of pricing information in the derivatives industry, sending the data to more than 300 financial companies that use it to determine the prices of similar contracts on their own books. The company is majority owned by several Wall Street firms, including JPMorgan Chase, Bank of America and the Royal Bank of Scotland.

Distribution

Markit's data can be accessed via multiple distribution channels including desktop, internet and custom built feeds. We also provide intuitive online products that allow our clients to collaborate in real-time and permit the exchange of documentation in a secure environment. Over 60 major banks use these services.

Markit Connex – A secure, real-time communication tool that combines instant messaging (IM), identity management, discussion forums, content, alerts and directory services.

Markit Desktop for Windows – Markit Desktop for Windows provides the essential tools for viewing, analysing and supporting your derivative trading decisions by combining the full scope of daily and real-time Markit price data with the leading broker and exchange data together with news in a fully customisable desktop.

Markit Document Exchange – A centralised secure repository that allows prime brokers and their clients to exchange legal counterparty documentation.

Portfolio Management

Markit's Portfolio Management services and solutions are used by over 60 banks to manage their bank loan portfolios and structured deals efficiently and accurately. Markit WSO gives immediate access to real-time reference and transactional loan data.

Markit WSO Administrator & Reporting – A highly accurate and efficient administrative system with dedicated loan functionality for tracking and reporting, combined with over 170 standard accounting and portfolio analysis reports with dynamic properties and full report descriptions.

Markit WSOData – A centralised repository of reference and transactional loan data, allowing request/retrieval and integration with the Markit WSO Administrator for straight-through-processing.

Markit WSOWeb – A web-based application for clients who outsource back office loan administration to Markit WSO allowing them to view their portfolios securely online 24/7.

Research

Banks use our research products to help them implement best practice and better understand business conditions within the global financial markets.

Markit ABS Performance Report – A service that provides essential data for dealers and investors that need to track evolving risk, value and performance of underlying collateral assets quickly and efficiently.

Markit MSA – An independent, validated and trusted market share service that pools and consolidates trading information to provide users with an aggregated view of European equity trading.

Markit Metrics – A tool to help users of credit, interest rate and equity derivatives report key on operational statistics on a monthly basis.

Markit PMIs – Monthly reports that provide in-depth information on the underlying PMI data to offer a comprehensive economic update to professional investors. Reports are available at global, regional and national levels.

Trade Processing

Our world-class electronic platform processes over 300,000 trades every month. Markit Trade Processing services are relied upon by major industry players, to help reduce risk exposure, increase counterparty transparency and create operational efficiencies for a variety of post-trade processing activities.

Markit Wire – Delivery of real-time legal confirmation, trade capture, and straight-through-processing for sell-side, buy-side, inter dealer-brokers and fund administrators. Markit Wire is used by over 70% of our bank trade processing clients.

Instinet BlockMatch report their trades using Markit BOAT

We are pleased to announce that Instinet Europe Ltd is switching the reporting of all trades from its BlockMatch MTF to Markit BOAT. Since its launch in 2008 as an MTF, BlockMatch trades have always been reported immediately.

Instinet will continue to report BlockMatch trades in real time but will now report to Markit BOAT where the trades will be identifiable by the BlockMatch MIC (BLOX) in accordance with the MIFID post-trade transparency requirements.

Markit BOAT is the largest trade reporting venue in Europe with 74% market share of MiFID OTC trade reporting. This represents 22% of combined on-and-off exchange turnover in Europe(Source: Thomson Reuters).

Markit and DTCC link for syndicated loans

New York, NY and London – Markit, a leading global financial information services company and The Depository Trust & Clearing Corporation (DTCC) today announced plans to bring together key services for the loan market in order to offer a comprehensive solution for the processing of syndicated loans. The initiative aims to increase efficiency and help reduce counterparty and operational risk in the multi-trillion dollar syndicated loan market.

DTCC is expected to contribute its Loan/SERV Messaging Service to Markit’s electronic loan settlement platform. The Loan/SERV Messaging Service is a secure, automated network for the transmission, receipt and online storage of industry standard loan messages in FpML format. The combination of this service with Markit’s loan settlement platform will improve communication between buy-side and sell-side market participants significantly. In addition, the DTCC will connect the new Markit platform to other existing and future Loan/SERV products for loan reconciliation and cash settlement including Delivery versus Payment (DVP).

Markit’s platform, which integrates parts of its WSO portfolio management software and services, will be enhanced further once Markit completes its acquisition of ClearPar, an automated syndicated loan operations platform, from FIS. The acquisition, which was agreed today, is expected to close by the end of this year. The Markit platform will also provide connectivity to Markit Document Exchange (MDE) and Markit Entity Identifiers (MEI) to ease the transfer of information such as reference entity data, administrative details and ancillary counterparty documentation.

Armins Rusis, Executive Vice President and Global Co-Head of Fixed Income at Markit, said: “The syndicated loan market is one of the largest credit asset classes and we have been working with the industry on a global settlement solution that will connect buy- and sell-side participants electronically for the first time. It is only by improving communication across the marketplace that we can speed loan settlement times and reduce operational risk to bring about a more transparent and liquid loan market.”

“We’re pleased that Markit and DTCC have come together to provide this solution to the loan market,” said Michael C. Bodson, Executive Managing Director, Business Management and Strategy at DTCC. “The Loan/SERV Messaging Service will help eliminate faxes and associated back-office costs while greatly improving the reliability, timeliness and accuracy of syndicated loan communications. This service and future Loan/SERV products will help move the syndicated loan market closer to straight-through processing.”

Andrew Gordon, Chief Executive Officer and President of Octagon Credit Investors, said: “Participants in the syndicated loan industry have long agreed on the need to move to electronic-based processing. In addition, there is a necessity in the industry to provide transparency in the closing and settlement process. This combined solution to be provided by Markit and DTCC is a positive step in the right direction. We hope the majority of the loan community recognizes the need for this type of solution.”

The DTCC Loan/SERV Messaging Service is expected to be incorporated into the Markit loan settlement platform in the first half of 2010.

Markit acquires ClearPar Loan Settlement system

New York, NY and London – Markit, a leading global financial information services company, today announced it has agreed to acquire ClearPar from FIS. ClearPar is an automated syndicated loan operations platform used for the settlement of par and distressed loan trades in the U.S. and Europe.

Markit will integrate ClearPar with parts of its WSO division, a leading provider of portfolio management software and services for the syndicated loan market, to create an electronic loan settlement platform for buy-side and sell-side market participants. The combination of ClearPar and Markit’s loan business will help reduce counterparty and operational risk in the approximately $600 billion leveraged loan market by improving loan settlement times.

Lance Uggla, Chief Executive Officer of Markit, said: “Markit has spent the past five years focused on all aspects of the loan market, from loan pricing, identifiers and indices to portfolio management software and services. Our acquisition of ClearPar enhances our loan offering and allows us to combine parts of Markit WSO, a platform that is used by the buy-side, with ClearPar, which is widely used by the sell-side. By bringing these two assets together, Markit will be able to connect the market electronically, creating significant operational efficiencies. I believe this will be well received by market participants and regulatory bodies alike.”

Armins Rusis, Executive Vice President and Global Co-Head of Fixed Income at Markit, said: “We are excited about the ClearPar acquisition and the positive impact it will have on the marketplace. The combination of Markit’s loan processing and data platform with ClearPar’s settlement system will allow us to introduce faster, more accurate settlement of loan trades. Existing and prospective investors in the syndicated loan market have been seeking a global solution for some time.”

ClearPar, launched in 2001, is part of FIS’s Advanced Commercial Banking Solutions (ACBS) division and provides a middle-office platform for trade settlement in the syndicated loan market. The platform supports primary assignments and secondary market trading for U.S. and European credits, including a distressed debt settlement service that launched earlier this year. Markit WSO provides data, software and services designed to make the management of syndicated bank loans and structured deals more efficient and accurate.

E.A. Kratzman, President of Katonah Debt Advisors, said: “As a major investor in credit, I view the combination of Markit and ClearPar as the most positive step toward true automation of closing and settlement in the loan market in many years. Most market participants are eager to see syndicated loan processing and trade settlement achieve the levels of workflow speed and efficiency that have evolved in other financial markets.”

Richard Levy, President of FIS’ ACBS division, said: “FIS is proud of the innovation we have brought to the commercial loan marketplace including LMA settlement and, most recently, distressed trade settlement. This transaction will allow FIS’ ACBS division to sharpen its focus on its market leading Loan Servicing System and front-office suite of products in sales, syndication and loan trading.”

Markit and FIS have also signed a strategic alliance agreement to promote and integrate Markit’s loan pricing, data and settlement systems with FIS' ACBS front office systems, SyndTrak and SyndTrak Online, for sales, syndication and deal site publishing.

Upon completion of the transaction, Markit will have more than 360 employees dedicated to the loan market and over 650 financial institutions as clients with over $1 trillion in corporate loans under management. The deal is expected to close by the end of the fourth quarter of 2009.


Markit acquires DTCC Loan/SERV messaging portal

Markit, a leading, global financial information services company, today announced it has agreed to acquire the Loan/SERV messaging portal from The Depository Trust & Clearing Corporation (DTCC). The acquisition expands the ability of Markit’s loan messaging hub, Markit WSOData, to accept and distribute Financial Products Markup Language (FpML) messages from agent banks.

Markit WSOData receives by email, fax and FpML more than seven million agent notices on syndicated loans each year and redistributes over four million of those notices to clients via electronic straight-through delivery. As the industry migrates from sending critical information about loans via email and fax to FpML, the new standard for electronic data exchange for financial products, Markit WSOData will increase the capability to update electronically clients’ portfolio management systems in real time.

DTCC Loan/SERV’s messaging portal, in a pilot program, recently demonstrated the first end-to-end delivery of FpML messages in the loan industry.

Karoline Kane, Executive Director, Global Loan Operations at J.P. Morgan said: "Expansion of Markit’s loan messaging hub is valuable to agent banks because it allows us to interface with one platform to send loan notifications via FpML and permits a seamless transition from faxes and emails to the new standard in technology.”

Joe Widner, Global Head of Loan Processing at Markit said: “Expanding the capabilities of our loan messaging hub and integrating FpML functionality with our loan settlement platform enables us to provide a level of transparency and accuracy about loan data not previously available to lenders and agent banks. The acquisition is an important step in Markit’s effort to promote efficiency in the loans market.”

DTCC and Markit announced plans last year to bring together key services for the loan market to increase efficiency and help reduce counterparty and operational risk in the multi-trillion-dollar syndicated loan market.

Chris Childs, DTCC Managing Director, Asset Services said: “Contributing DTCC Loan/SERV to Markit's Global Loan Processing business continues our efforts to bring together key services for the loan market in order to offer a comprehensive solution for the processing of syndicated loans.”

Markit Buys Wall Street On Demand

UK-based data vendor Markit aims to create a more "viral" and "collaborative" Web presence for its data and tools as a result of its purchase of Wall Street on Demand, a Boulder, Colo.-based provider of wealth management data services and hosted data modules for institutional, media and online brokerage portals.

The deal, for an undisclosed sum, is expected to close in the coming weeks, and gives Markit in-house expertise that it can use to increase and improve the Web-based delivery of its data.

"If you're a financial information services company that needs to distribute content, and you are not Thomson Reuters or Bloomberg... one of your options is to distribute your data via the Web," says Lance Uggla, chief executive of Markit.

He says Markit's Web sites are currently more geared towards delivering specific data points to clients, whereas the vendor is now seeking to create an online presence that provides a full picture of the markets, combining prices, news, research and trade ideas with the ability for users to collaborate. "Currently, these sites are places where people go to get content... but the ability to create ‘emotional attachment' around datasets is exciting to me. I believe these technologies, delivered cost-effectively via the Web, are the future of financial markets," Uggla says.

Markit also aims to use Wall Street on Demand's expertise to improve its data delivery using mobile applications. "Markit doesn't have any mobile apps. We could build them ourselves, but we don't have 20 years' experience in this space," Uggla adds. That experience had also sparked interest from other, unnamed companies that approached Wall Street on Demand's owner Goldman Sachs - which acquired the vendor four years ago (IMD, May 8, 2006) - earlier this year, who then conducted a bidding process for the company.

The deal guarantees support for Markit's future plans for content and delivery tools, since another buyer might have taken the company in a different direction. "We were already a client of Wall Street on Demand, so we knew the company and love the work they do. But we also felt they were a very attractive asset, and when the opportunity arose to acquire them, we jumped at the chance," Uggla says.

Officials say a key part of its plan is to allow Wall Street on Demand to continue its current business, and to leverage Markit's global presence to expand use of its modular data content and Wealth Desktop product outside its core base of providing equities data to clients in North America.

"A key part of this for us is that Markit is additive to our capabilities and does not hurt any of our existing customer relationships or partners. For example, we're strong in equities content and they are strongest in fixed income... we're more geared to the front end, while they are more back end, and we're more retail, while they are more institutional," says Jim Tanner, chief executive of Wall Street on Demand. "Despite having hundreds of feeds, we didn't have what they supply."

Valuations

Markit’s innovative valuations services provide fair values for a range of liquid and illiquid securities, structured products and derivatives. Over 50 major banks use our Markit Totem service.

Markit Totem – A monthly sell-side benchmarking service used as the key independent check of trading book valuations by leading global banks, trading houses and other investment professionals.

Markit Valuations Manager - A valuations management tool that simplifies the delivery and collection of counterparty position data and valuations across both over-the-counter derivatives and cash instruments.

References


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