Open Markets or Markit?

The US justice department's investigation of the CDS market is probably more a reflection of the changing political attitudes surrounding credit derivatives rather than a discovery of criminal behaviour as a result of months of financial forensics.

When CDSs were the closest thing to liquid gold in the financial markets two years ago (remember those days?) what do you think the likelihood this type of investigation would have taken place?

Markit itself was born out of the activities of a closed group of credit dealers that mostly trade among themselves. Markit's own guardianship of the RED database (the database of reference entities for credit derivatives) has won the data vendor deserved praise for offering a small amount of stability and centralisation to a murky and chaotic market. However, Markit has garnered some criticism from many quarters of the industry about its default monopoly of the CDS data market due primarily to its management of RED.

Markit has long been cited as a data vendor to watch and possible close competitor to the major players of Bloomberg and Thomson Reuters. Its rise has been closely connected to the growth of the credit market. Its future will be interesting to watch.