Risk management

Markit Launches Risk Update Solution for Cleared Derivatives

The netting synchronization service will help banks reduce their capital and operational costs

Markit, the financial information services major, announced that it has introduced a netting synchronization service for banks that will help them automatically update their risk management systems.

The solution has been taken up by LCH. Clearnet in its SwapClear clearing house and will soon be extended to other clients as well.

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A Single Data Access Point

With its new solution, Markit will provide banks with a single source of data needed to cancel trades that have already been terminated and create new ones, grouping the residual parts remaining after the netting process. This will drive down their capital and operational costs associated with the clearance process for over-the-counter derivatives.

LCH. Clearnet’s Chief of Clearing Solutions, SwapClear, and Listed Product Management, Cameron Goh, commented: “ Having our compression instructions available on the MarkitSERV network leverages Markit’s extensive connectivity to the industry and will enable participants to update their systems more efficiently as they increase the use of our compression services.”

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Netting scalability made more efficient

Markit’s Managing Director and Head of Business Development for MarkitSERV, Claire Lobo, said: “Netting is a critical process for the market but it can create another data management burden and source of operational risk for participants. By synchronising with clearing houses, we update firms in real time about changes to their positions, making it efficient for them to scale their use of netting.”

Users to Benefit from MarkitSERV

In addition, the users of Markit’s solution will be able to tap into the functionalities of its MarkitSERV service for the processing of OTC derivative trades, allowing them to reconcile trades, both cleared and uncleared, Markit’s press release stated. The financial information services provider will also offer, when applicable, regulatory reports to trade repositories on behalf of its clients using the new solution.

The MarkitSERV solution offers users a single point of access to 16 clearing houses globally, with a suite of services, including trade confirmation, clearing, allocation of block trades, and regulatory reporting across asset classes.

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