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Markit Announces New Electronic Novation Consent Service to Meet Industry Commitments to New York Fed

Markit, a leading provider of independent data, portfolio valuations and over-the-counter (OTC) derivatives trade processing, today announced a new electronic novation [1] consent service for clients in the credit derivatives market. The new service aims to support commitments made by the Operations Management Group (OMG), a senior industry leadership group, to the Federal Reserve Bank of New York in March this year.

The novation consent service will link Markit Trade Manager, a comprehensive cross-asset class trade workflow and reporting service used by major buy-side institutions, to the Depository Trust & Clearing Corporation (DTCC), the central repository of novation consents for credit derivative products. The new link, which is an extension to the existing link between Markit and DTCC, is scheduled to go live in August 2008. The new service complements the existing Markit Wire novation service for the interest rate and equity derivative markets.

“Markit’s electronic solutions for novations and allocations will enable PIMCO to achieve operational efficiency and mitigate risk quickly and efficiently across the major OTC derivative asset classes,” said Ric Okun, Senior Vice President at PIMCO.

“This initiative aims to support commitments made by major market participants to the New York Fed to improve trade accuracy and achieve greater operational efficiency,” said Jeff Gooch, Executive Vice President and Co-Head of Trade Processing at Markit.

The new electronic novation service strengthens Markit’s position as the number one provider of straight-through-processing solutions for institutional investors in the OTC derivatives market. The Markit Trade Manager service sent over 50,000 client trades for confirmation to DTCC in April, which was a new monthly record. In addition, during the first four months of 2008, Markit processed almost 10 times the number of interest rate derivative novations it processed during the same period a year ago.

Markit has an existing allocation [2] service that provides dealers with timely and accurate electronic allocation feeds from their clients. It addresses the recommendations made by the OMG in its letter to the Federal Reserve Bank of New York relating to the automation of trade allocations. As well as improving timeliness and accuracy of trade booking, this functionality provides a reliable and scaleable solution to cope with increasing trading volumes.