Markit Group Limited, the leading provider of independent data, portfolio valuations and OTC derivatives trade processing, today announced it has acquired International Index Company Limited and has also agreed to acquire CDS IndexCo LLC. Markit and CDS IndexCo expect the transaction to complete by the end of the year.
IIC owns the iTraxx Europe and iTraxx Asia credit derivative indices as well as the global family of iBoxx bond indices. CDS IndexCo owns the CDX credit derivative indices and the synthetic structured finance and loan indices ABX.HE, CMBX and LCDX.
The iTraxx and CDX credit derivative index families, which resulted from the merger of dealer-owned indices in 2004, are credited with revolutionizing the credit derivative markets. They have increased the transparency and liquidity of these markets, and provide investors with an efficient, rules-based tool to gain or hedge exposure to the underlying credit markets.
The iBoxx bond index family, which launched in 2001, was the first comprehensive suite of independent, transparent, multiple-contributor priced bond indices.
Lance Uggla, ceo of Markit, said: "The acquisition of IIC and CDS IndexCo will put us at the very heart of the global credit and rates markets. By bringing the indices together, we will create the next generation of credit benchmarks and stimulate innovation in trading across the entire fixed income market."
The members of IIC and CDS IndexCo believe that Markit’s ownership will enhance product development and deliver considerable benefits to the financial markets.
IIC is owned by ABN AMRO, Barclays Capital, BNP Paribas, Deutsche Bank, Deutsche Börse, Dresdner Kleinwort, Goldman Sachs, HSBC, JPMorgan, Morgan Stanley and UBS.
CDS IndexCo is owned by ABN AMRO, Bank of America, Barclays Capital, Bear Stearns, BNP Paribas, Citi, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, JPMorgan, Lehman Brothers, Merrill Lynch, Morgan Stanley, UBS, and Wachovia.
Fergus Lynch, managing director, global head of Index Development at Deutsche Bank and chairman of IIC, added: "The development of best of breed indices has been the crucial cornerstone to the explosive growth in index trading. Combining these foundations with Markit’s proven development capabilities will enable index trading to reach even greater heights."
Brad Levy, managing director at Goldman Sachs and acting chairman of CDS IndexCo, stated: "The company has worked with Markit for the past three years in many capacities. They possess the infrastructure to manage the indices efficiently, and their knowledge of the market and products is unparalleled. Markit is well-prepared and positioned to take on full ownership of the indices, and I’m confident that they will continue to be an engine of innovation for the industry going forward."
The official names of the indices will remain unchanged but will be known as Markit indices. As such, the IIC indices will be called Markit iTraxx and Markit iBoxx with immediate effect. The CDS IndexCo indices will be known as Markit ABX.HE, Markit CDX, Markit LCDX, etc. once the acquisition has been completed.
Markit’s new index division will be headed by Stephan Flagel who joined Markit in June this year from Barclays Capital where he was coo for global research. Flagel will report to Niall Cameron, a member of Markit’s Executive Management team and head of Equities and Indices.
IIC was advised by Deutsche Bank in the transaction.