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MarkitSERV Credit Centre Named Most Innovative Regulatory Solution for Derivatives by FOW

Markit, a leading, global financial information services company, is pleased to announce it has won the FOW award for “best innovation for regulatory change” for MarkitSERV Credit Centre, its pre trade credit checking platform for OTC derivatives. FOW is the leading information service for the global exchange traded derivatives market.

Jeffrey Maron, managing director at Markit, said: “With the CFTC’s mandate to trade certain OTC derivatives using SEFs approaching, we see a growing focus in the industry on the connectivity and workflows required for the efficient operation of the SEF market. Part of the challenge of trading on SEFs is the need to confirm that counterparties have sufficient credit in place to back each order that enters the market.

“We designed MarkitSERV Credit Centre in consultation with the buyside, regional banks, SEFs, futures commission merchants and clearinghouses to create a solution that addresses the needs of all market participants. We are delighted to see Credit Centre win an FOW award.”

Pre trade certainty of clearing is required to prevent failed trades and to support recent CFTC guidance which states that SEFs must provide impartial access to their platforms and enable all users to post buy and sell orders, as well as accept orders posted by others. The CFTC also requires the voiding of trades which fail to clear due to insufficient credit, meaning that firms risk unanticipated financial exposure in the event they are not able to enter or exit a position.

Credit Centre provides an ultralow latency service with which SEFs and other electronic trade execution venues confirm the availability of credit on both sides of a transaction at the time a trader posts a price or executes an order.

Credit Centre also gives trading firms control over how their credit lines are deployed and prevents the fragmentation of credit lines among multiple SEFs. The service keeps the size of credit lines private with trading venues only receiving confirmation of whether a party has sufficient credit to do a trade.