Financial data provider Markit and US post-trade utility the Depository Trust and Clearing Corporation (DTCC) will launch MarkitSERV, a joint-venture company providing trade confirmation for over-the-counter (OTC) derivatives, on 1 September.
The announcement follows the completion of due diligence and the receipt of approval for MarkitSERV from the UK Financial Services Authority and the US Department of Justice.
MarkitSERV combines the DTCC Deriv/SERV and Markit Wire trade confirmation platforms to cover all major asset classes including credit, interest rate, equity and commodity derivatives.
The joint system will connect multiple market participants and execution venues to downstream processing platforms. It will also connect to various central counterparty platforms for interest rate swaps and credit default swaps in collaboration with the DTCC Trade Information Warehouse, a trade database and centralised electronic infrastructure for post-trade processing of OTC derivatives contracts.
According to the two founders, MarkitSERV will cut costs by removing the need for users to connect to several asset-class-specific trade processing systems, instead allowing clients to use their existing connectivity to access a wider variety of combined services.
The joint venture was launched in response to calls from politicians, regulators and market participants to reduce risk in the OTC derivatives market by standardising and centrally clearing as many of these transactions as possible in the wake of the bankruptcy of US investment bank Lehman Brothers.
“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,” said Lance Uggla, CEO of Markit, in a statement. “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.”
“Our shared vision is to provide the industry with a more secure, reliable and streamlined operational environment for confirming OTC derivative transactions globally,” added Michael Bodson, executive managing director of DTCC business management and strategy and chairman-designate of MarkitSERV. “Each of our firms has been independently successful, and this joint company will now leverage our combined expertise to extend benefits to a wider user base and across a more diverse range of financial instruments.”