The alliance will dramatically improve the processing of over-the-counter (OTC) derivative transactions for mutual clients, whatever the asset class or complexity of the instrument. Markit and Calypsoâs broad user base, which includes the largest investment managers and dealers, will now have access to a single, automated workflow solution.
This partnership will enable users to pass data seamlessly from Calypsoâs trade capture system to Markitâs trade processing platform thus automating a variety of post-trade services including trade day affirmation, DTCC trade confirmation, non-STP (Straight Through Processing) confirmation workflow and portfolio reconciliation. Markit Trade Processing also facilitates novation, termination and dispute resolution via Markit Connex, a secure instant messaging service.
The U.S. Federal Reserve met dealers and their regulators last month to discuss settlement backlogs and operational risks in the banksâ OTC derivative businesses. Progress in tackling trade processing problems in the credit derivatives market was reviewed, while the need to improve operations in the equity derivatives market was highlighted.
Leo Schlinkert, Executive Vice President and Head of Trade Processing and Distribution at Markit, said: âMarkit is very much focused on helping the industry achieve greater operational efficiency at a time of dramatic market growth in the OTC derivative markets and increased regulatory concern over the infrastructure supporting these markets. By linking our platform to industry utilities and leading vendors such as Calypso, we are able to pave the way for a more efficient marketplace. This will allow our clients to achieve true STP, making costly errors and backlogs a thing of the past.â
Gerard Rafie, VP of Marketing at Calypso, commented: âWhat drew us to Markit was its unique trade processing solution that covers all OTC derivative products and asset classes across a broad set of services. We are delighted to be working with them to help address the operational problems that are besetting the privately traded marketplace, and to encourage the smooth development of these fast-growing, innovative markets.â
At an OTC derivative trade processing roundtable hosted by Markit and The Banker magazine in July this year which brought together leading OTC derivative market participants, the DTCC, SwapsWire and the Financial Services Authority, Sean Taylor, EMEA regional head of client onboarding at UBS, stated: âDoes operational efficiency now make you a winner in this business? Personally, I think so.â
Markit Trade Processing was recently crowned Operations Managementâs Vendor of the Year 2006.