Dow Jones Indexes (DJI) has finalised an agreement to manage Trac-X, the suite of credit default swap (CDS) index products formed by JPMorgan and Morgan Stanley in April 2003.
Effective immediately, DJI will assume all responsibility for the licensing, new product development (including the construction of the portfolios), branding, marketing and sales of Trac-X. Under the agreement, the indexes will be rebranded Dow Jones Trac-X Indexes.
By the first quarter of 2004, Dow Jones will assume responsibility for the maintenance, calculation and distribution of index values and index data. The company has also announced plans to launch the market's first-ever European high yield credit default swap index product, the Dow Jones Trac-X Europe High Yield Series 1, by 1 December.
DJI says it will put together regional advisory committees in the US, Europe and Asia, which will comprise a broad base of credit derivatives market makers. These committees will ensure that Trac-X indexes remain a neutral product.
Lars Hamich, executive director of global business development at DJI, says: "Having the participation of the leading credit derivatives participants will ensure that as we continue to develop the suite of products, the Dow Jones Trac-X Indexes remains as transparent and liquid as possible."
In addition to transferring management of the suite, Morgan Stanley and JPMorgan also will be opening the ownership structure to other market makers in the Dow Jones Trac-X Indexes. This will further increase the transparency of the product, says DJI.