Liffe, the global derivatives business of NYSE Euronext (NYX), announced today that it has signed a licence agreement with Markit, a financial information services company, to launch credit default swaps (CDS) based on Markit iTraxx Europe indices, bringing a cleared solution for CDS a step closer.
The Markit iTraxx Europe indices are the most widely traded CDS indices for European credit protection. This agreement allows Liffe to offer a new iTraxx product which will clear on Bclear, its proven solution for processing OTC derivative contracts.
Garry Jones, executive director of Business Development and Strategy at Liffe, commented: “We are delighted to be leading our CDS initiative on Bclear with the Markit iTraxx indices which are the industry standard. This agreement further enhances and builds on our existing and valued relationship with Markit.”
Bclear will provide existing and new CDS market participants with an efficient platform for reducing operational and counterparty risk whilst maintaining the flexibility of pre-negotiation that OTC market participants value.
CDS trades will be negotiated and agreed away from the exchange, before being processed through Bclear and cleared through LCH.Clearnet Ltd, which will stand as the central counterparty to all Bclear CDS transactions.
Stephan Flagel, managing director and head of Indices at Markit, said: “We are pleased to be working with Liffe and its well regarded platform Bclear. The demand to develop new products referencing the Markit iTraxx indices underlines the central role that these indices play in providing transparency and liquidity to the global credit markets.”
