Mark-it Partners has teamed with Standard & Poor's Cusip Service Bureau to develop a numbering system for its reference entity database service, Project Red.
S&P's Cusip Service Bureau has created two sets of alphanumeric codes, known as Cusip-linked Entity MIP codes (Clips). A set of six character codes is used to represent credit default swap reference entities, while a set of nine character codes represents pairs of reference entities and reference obligations.
The codes provide a quick method of identifying entities and obligations in default swap trade confirmations which would otherwise have to be done by means of full legal name and bond description.
Mark-it says it is essential that traders in the credit markets can unequivocally agree on the same reference entity and reference obligations. The numbering system makes this so easier to do than pure textual information.
Jim Taylor, managing director, Standard & Poor's says it is vital that the market moves towards standardisation so that the settlement of a derivative trade eventually becomes no harder than settlement of a bond trade.
"As the use of bond Cusips removes any doubt from bond settlement, the existence of a derivative entity numbering system will speed the move towards matching, settlement and clearing through centralised systems," he adds.
The Red Service is a set of benchmark reference entity names and related reference obligations which enable dealers to standardise documentation and avoid mistakes associated with misunderstanding the relationship between entities and obligations. The Red database currently contains codes and full names for over 1000 reference entities traded in the credit derivatives market. Mark-it says it intends to double this to 2000 by year-end.
The agreement with S&P follows a recent deal with europrospectus.com, the online text-, and clause-searchable prospectus service, to supply Mark-it with prospectuses to support Project Red. The europrospectus service is currently used by leading investment banks and law firms, as well as asset managers, accountants, consultants, regulators, academic institutions and other capital markets participants to provide quick and precise access to hard-to-find prospectuses and clauses within them.
Seperately, Standard & Poor's has announced plans for a new real-time update service for fixed income securities reference data, designed to support the industry's Real Time Trade Match (RTTM) efforts. The service is expected to be available mid-year 2004, at the same time that regulatory requirements mandating submission of municipal trades within 15 minutes of execution are scheduled to take effect.
S&P is also moving to expand coverage of its Compustat database to incorporate increased Asian and European company coverage through local data providers.
Through a new local alliance with Hong Kong-based data provider CEIC, the Compustat database now includes an additional 1,300 companies in Hong Kong, Indonesia, Malaysia, Singapore and Thailand. The vendor promises to further expand its Asian population to contain nearly all listed companies in those countries.
In Europe, S&P says it will "dramatically expand" the United Kingdom company coverage in Compustat by year-end, as well as establish new relationships with major European based platform re-distributors. Compustat already covers 96% of the total European market capitalisation..