Markit and DTCC launch OTC derivatives trade processing JV

Source: Markit

Markit and The Depository Trust & Clearing Corporation (DTCC) today launched MarkitSERV, a new company that combines the two organisations' electronic trade confirmation and workflow platforms to provide a single gateway for over-the-counter (OTC) derivative trade processing.

Jointly owned by DTCC and Markit, MarkitSERV combines the DTCC Deriv/SERV and Markit Wire trade confirmation platforms to cover all major asset classes including credit, interest rate, equity and commodity derivatives. The new company includes the Markit and DTCC flagship trade processing services for affirmation, confirmation, novation, allocation and reconciliation.

The initiative was first announced in July last year, subject to completion of due diligence, regulatory filings and approval by relevant global regulators. Last month, Markit and DTCC announced that due diligence was complete and MarkitSERV had received regulatory approval from the U.K. Financial Services Authority and the U.S. Department of Justice.

MarkitSERV was created in response to calls from regulators, politicians and market participants for greater cooperation within the industry over electronic trade confirmation to reduce risk in the OTC derivative markets. More than 50 banks, 50 inter-dealer brokers and 1,200 funds are already connected to the service which is expected to handle in excess of 15 million confirmations in its first year.

"We believe the launch of MarkitSERV will be tranformational for the financial community that has been looking for more streamlined and automated confirmation of OTC derivative instruments globally," said Michael C. Bodson, Executive Managing Director of DTCC Business Management and Strategy, and Chairman of MarkitSERV. "We've listened to our customers and by combining the expertise of these two very successful organizations, we be able to further extend benefits to a wider user base and across a more diverse range of financial instruments."

Lance Uggla, Chief Executive Officer of Markit, said: "MarkitSERV combines the individual strengths of Markit and DTCC's trade processing services to provide a single electronic platform for the OTC derivative markets. This initiative represents an important milestone at a time of stime of significant change in the financial markets, and will provide the industry with the framework it needs to improve efficiency and reduce risk."

Jeff Gooch, Chief Executive Officer of MarkitSERV, said: "MarkitSERV is now live, providing market participants with a single electronic gateway for trade processing across asset classes. We look forward to working with the buy-side and sell-side to help them reduce operational risk and adopt clearing in the OTC derivative markets, in line with their commitments to global regulators."

Ric Okun, Executive Vice President of PIMCO, said: "In the curent economic climate, having a robust derivative processing capability has become more essential than ever before for buy-side institutions. At PIMCO, we are very excited about the enhanced workflow platform being offered by MarkitSERV and see it as an integral solution to meet the increasing demands of our business."

MarkitSERV will rationalise costs by removing the need for users to connect to numerous, asset-class specific trade processing systems. Instead, clients will be able to use their existing connectivity to access a wider variety of combined services. The new company will be industry-governed and will have a global presence, including offices in London, New York and Tokyo.

Markit's data and valuation services, and DTCC's Trade Information Warehouse, life-cycle event processing and centralised settlement and payment netting services will remain part of the respective parent companies.

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