Markit’s sync with clearers helps banks optimise collateral
Markit has launched a service to help banks automatically update their risk systems after netting and compression activity at clearing houses. The service is live with LCH.Clearnet’s SwapClear and will be rolled out to other clearing-houses. Netting within a clearing-house helps reduce capital and operational costs associated with OTC derivatives. The move comes as regulation prompts market participants to review their collateral optimisation processes.

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 Risk Management One of the most common terms utilized by brokers, risk management refers to the practice of identifying potential risks in advance. Most commonly, this also involves the analysis of risk and the undertaking of precautionary steps to both mitigate and prevent for such risk.Such efforts are essential for brokers and venues in the finance industry, given the potential for fallout in the face of unforeseen events or crises. Given a more tightly regulated environment across nearly every asset class, One of the most common terms utilized by brokers, risk management refers to the practice of identifying potential risks in advance. Most commonly, this also involves the analysis of risk and the undertaking of precautionary steps to both mitigate and prevent for such risk.Such efforts are essential for brokers and venues in the finance industry, given the potential for fallout in the face of unforeseen events or crises. Given a more tightly regulated environment across nearly every asset class, Read this Term systems.

The solution has been taken up by LCH. Clearnet in its SwapClear Clearing House Clearing House A clearing house is defined as an intermediary between two parties, a buyer and seller, which helps facilitate the overall process from trade inception to settlement. Clearing houses streamline the exchange of payments, securities, or derivatives transactions.The clearing house is situated between two clearing firms who also helps reduce the risk of either member firm failing to honor their respective trade settlement obligations.Buyers and sellers enter into legally binding agreements for the e A clearing house is defined as an intermediary between two parties, a buyer and seller, which helps facilitate the overall process from trade inception to settlement. Clearing houses streamline the exchange of payments, securities, or derivatives transactions.The clearing house is situated between two clearing firms who also helps reduce the risk of either member firm failing to honor their respective trade settlement obligations.Buyers and sellers enter into legally binding agreements for the e Read this Term and will soon be extended to other clients as well.

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.”

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.