The US Depository Trust & Clearing Corporation (DTCC) and UK-based Markit will launch their OTC derivatives processing services joint venture in September after getting the green light from regulators.
The new London-based MarkitServ company will launch on 1 September after receiving approval from the US department of Justice last month as well as the all-clear from the UK Financial Services Authority.
Initially announced last July, MarkitServ was created in response to calls from regulators, politicians and market participants for a push towards electronic trade confirmation across the rapidly growing OTC derivative market.
The firm will combine the DTCC Deriv/Serv and Markit Wire platforms to provide a single gateway for OTC trade processing, covering credit, interest rate, equity and commodity derivatives. It will also comprise Markit Trade Manager, Tie-Outs and PortRec in addition to the DTCC MCA Xpress and novation consent service.
The partners say MarkitServ will connect multiple market participants and execution venues to downstream processing platforms such as DTCC's Trade Information Warehouse for credit default swaps (CDS). It will also connect to various central counterparty platforms for interest rate swaps and CDS, in collaboration with the DTCC Trade Information Warehouse.
In addition, it will cut 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.
Lance Uggla, CEO, Markit, says: "We have had extensive discussions with buy-side firms over the past year, and the message we keep hearing is that they need a simplified processing solution that is accessible and efficient. We believe MarkitServ will address the industry's infrastructure needs and help the OTC derivative markets transition to a new environment of reduced risk and improved operational efficiency."
Jeff Gooch, CEO-designate, MarkitServ, adds: "We will help market participants meet their commitments to regulators globally to reduce operational risk and adopt clearing for the OTC derivative markets."
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.
The shareholders of Markit are currently being investigated by the US Justice department for possible anti-trust breaches in relation to CDS trades. The DTCC has also been asked by the Justice department for information in relation to the probe.