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Markit, DTCC Launch Joint OTC Derivatives Platform

Buy and sell-side firms a bit closer to processing derivatives electronically.

True to their August 11 announcement, Markit and The Depository Trust & Clearing Corporation today launched MarkitSERV, a new company that combines the two organizations' electronic trade confirmation and workflow platforms to provide a single platform for over-the-counter derivative trade processing.

The organizations are responding to the many calls from regulators over the past 10 years demanding that firms handle derivative trades electronically, rather than allowing backlogs of unconfirmed contracts to pile up for months. More than 50 banks, 50 inter-dealer brokers and 1,200 funds are already connected to the service, which is expected to handle in excess of 15 million confirmations in its first year.

Jointly owned by DTCC and Markit, 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 new company includes the Markit and DTCC flagship trade processing services for affirmation, confirmation, novation, allocation and reconciliation.

The initiative was first announced in July last year, subject to completion of due diligence, regulatory filings and approval by relevant global regulators. Last month, Markit and DTCC announced that due diligence was complete and MarkitSERV had received regulatory approval from the U.K. Financial Services Authority and the U.S. Department of Justice.

Ric Okun, Executive Vice President of PIMCO, said: "In the curent economic climate, having a robust derivative processing capability has become more essential than ever before for buy-side institutions. At PIMCO, we are very excited about the enhanced workflow platform being offered by MarkitSERV and see it as an integral solution to meet the increasing demands of our business."

MarkitSERV will rationalize 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. 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 centralized settlement and payment netting services will remain part of the respective parent companies.

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