The UK's Financial Services Authority has signed a deal to access credit data pricing services from Markit in an effort to step up surveillance of the opaque OTC markets.
Under the terms of the agreement, the watchdog will gain access to Markit’s benchmark credit default swap (CDS) pricing, RED (Reference Entity Database) and Portal.
Markit RED is a source of reference entity and reference obligation identifiers used throughout the CDS markets. The Markit Portal provides a window onto pricing, news and research in the financial markets.
The FSA says it will use the data for research and regulatory compliance purposes. The watchdog is particularly interested in the activities of hedge funds operating in the corporate loans markets and the potential for insider trading abuses.
Penny Davenport, director, product management at Markit adds: "The CDS market is a very effective barometer of a company’s financial health and acts as an early warning signal of trouble brewing."
She says the FSA joins a growing list of regulatory bodies, central banks, governments and auditors that subscribe to Markit’s services.