Markit and Creditex are pleased to announce that their portfolio compression platform, designed to reduce the amount of notional outstanding in the CDS  market, has won Risk Magazine’s ‘Industry Platform of the Year’ award. Risk Magazine is the world’s leading financial risk management magazine.
The 2009 Risk Awards recognise those institutions that have continued to provide derivatives and risk management expertise to their customers in difficult market conditions. Panel judges and clients praised the role of the Markit/Creditex platform in reducing the amount of notional outstanding in the CDS market thus minimising the perceived systemic risk within this market.
Kevin Gould, President of Markit North America, said: “We are extremely pleased that Risk has recognised our efforts to improve the infrastructure of the CDS market. We worked to a very tight schedule and delivered the platform in two months. The most challenging part was to develop and test the algorithm and we put our best people on the project to get it done quickly.”
Markit and Creditex were selected by the Operations Management Group in June 2008 to develop a trade compression platform focusing on single name CDS trades. To date, the platform has run 40 compression cycles and reduced notional volumes outstanding by $2.3 trillion. Reducing levels of outstanding trades via portfolio compression is one of the Federal Reserve Bank of New York’s priorities for addressing operational risk in the OTC derivative markets.
The Markit/Creditex trade compression platform went live in August 2008. It is the first platform of its kind to concentrate on single name CDS rather than index trades which have standardised coupons and are therefore easier to tear up. It also has the added advantage of leaving portfolio risk profiles unchanged. The platform operates multilaterally, tearing up trades across all submitted portfolios simultaneously.
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