Markit, a leading, global financial information services company today announced that BofA Merrill Lynch, Citi, and Goldman Sachs are the first futures commission merchants (FCMs) to agree to use MarkitSERV Credit Centre, the pre-trade credit checking solution for the OTC derivatives market.
MarkitSERV Credit Centre provides clearing certainty for trades executed in electronic and hybrid marketplaces.
Robert Burke, managing director and head of Global OTC Clearing at BofA Merrill Lynch, said: "Credit Centre's low-latency system for managing credit lines creates efficiency in our market and MarkitSERV has established itself as a provider participants can turn to for industry-wide solutions."
Antonio Reyes, managing director and global head - Electronic Execution OTC and Listed Derivatives Products at Citi, said: "We support MarkitSERV's work in developing a central credit limit solution for the industry. Mandates to clear and electronically trade OTC derivatives require new networks, information flows and technologies. A system that provides pre-trade clearing certainty is a priority for our changing market."
Ericka Leslie, managing director at Goldman Sachs, said: "A credit limit hub is an important utility for the industry and MarkitSERV, having played a prominent role in providing industry solutions, is suited to provide this type of service to all participants in the OTC derivative market."
Matthew Lynes, portfolio manager at Aberdeen Asset Management, said: "Maximising our flexibility in how we trade and where we clear is extremely important to us. Using Credit Centre to view and optimise our credit lines helps us operate more efficiently in the new world of derivatives trading."
Ron Levi, chief operating officer of GFI, said: "Having clearing certainty is an imperative for us. Credit Centre helps us meet our clients' needs and gives us the flexibility to execute with confidence whether trades get done through voice or electronic platforms."
Sunil Hirani, co-founder and chief executive officer of trueEx, said: "The low latency and push credit services provided by Credit Centre make it easier for execution venues to enter the swaps market. trueEX supports credit checking solutions that will give our clients the assurance of pre-trade pre-trade certainty of execution and clearing."
Jeffrey Maron, managing director at Markit, said: "The industry understands that providing clearing certainty is one of the challenges resulting from Dodd-Frank. We are pleased that BofA Merrill Lynch, Citi and Goldman Sachs are the first of many FCMs to agree to adopt Credit Centre as the mechanism to share credit line information with their clients and trading venues. Despite all the changes to the OTC derivatives market, MarkitSERV continues to provide the cross asset infrastructure that allows participants to transact safely and efficiently."
MarkitSERV Credit Centre provides buy-side firms, regional banks and other institutions that access clearing through FCMs with a consolidated view of the credit available to them. It also helps institutions determine how they deploy their credit lines among multiple execution venues.FCMs will update credit lines in real-time during the trading day as client portfolios change, and electronic execution venues will "ping" the MarkitSERV Credit Centre to confirm the availability of credit at the time a trader wishes to post a price or execute an order, removing the risk of a trade failing because a client firm has exceeded its credit limit. The service can also be used for checking and managing credit lines required for off-facility voice and block trades.
The ultra-low-latency system required for MarkitSERV Credit Centre is provided by TRADExpress from Cinnober, a leading global supplier of solutions and services to major trading and clearing venues.
MarkitSERV Credit Centre will initially cover OTC credit, foreign exchange and rates products. A centralised credit limit hub is a cost- and risk-effective solution for market participants because they can view and manage credit with just one connection rather than creating and maintaining connections to each and every trading and clearing venue in the market.
Markit announced the launch of Credit Centre in March.