FT Interactive Data, part of Interactive Data Corporation (NYSE: IDC) and a leading global supplier of securities pricing, evaluations and data for valuation purposes, today announced a new offering that facilitates the automated delivery of independent valuations of credit default swaps (CDS), helping clients more efficiently value their portfolios of derivatives.
The CDS valuation service represents the first new offering developed through FT Interactive Data's recently announced strategic alliance with Markit Group Limited (Markit), a leading source of over-the-counter derivative valuations, mark-to-market pricing, dividend forecasting, index services and reference entity data.
Credit default swap trading has become a significant driver of fixed income market activity. The International Swaps and Derivatives Association estimates that the notional amount of credit default swaps outstanding around the globe was $12.4 trillion in June 2005. This represents growth of nearly 50% since the beginning of 2005, and approximately 130% over the previous year.
FT Interactive Data's CDS valuation service provides a robust set of capabilities designed to meet the needs of firms that own or trade this type of derivative. The offering enables clients to review their CDS portfolio, identify which holdings they would like to value – with the option of using Markit's industry standard Reference Entity Database (RED) codes – and then easily submit a valuation request. Through an alliance with Markit, FT Interactive Data can deliver an independent valuation based on the cleaned and averaged prices taken from over 50 dealers in the CDS markets.
The CDS valuation service is available to clients as an add-on to FT Interactive Data's evaluation services. The new service is also seamlessly integrated into a module of FT Interactive Data's FTS online portfolio administration service.
"The rapid growth of derivatives in the financial markets has made it critical for firms to obtain reliable data that helps them more accurately value their portfolios," said Ray D'Arcy, president of sales, marketing and institutional business development at Interactive Data Corporation. "By forming an alliance with Markit, FT Interactive Data can now offer clients seamless access to a leading source of independent mark-to-market CDS data. Our CDS valuation service can replace the time-consuming and potentially error prone process of manually calculating the value of CDS holdings in spreadsheets, enabling clients to be more efficient and freeing up their time to focus on other value-added business activities."
"FT Interactive Data's new CDS valuation service enables firms to combine trusted delivery and support systems with Markit's independent CDS valuations and reference data," said Mike Rushmore, executive vice president of Markit Group. "We are excited to be working closely with FT Interactive Data to meet the rapidly expanding needs of the fixed income market."
In addition to CDS valuations, FT Interactive Data clients will also now have access to supporting information from Markit, such as spread curves, recovery rates, par spreads, accrued interest and present value deltas.