Markit, a financial information services company, today announced that the Markit iTraxx SovX Western Europe index would start trading on 28 September 2009. This is the first of the Markit iTraxx SovX indices to be tradable.
The Markit iTraxx SovX family of indices has been designed to meet investor demand for a transparent and standardised tool to monitor the sovereign credit default swap (CDS) market and gain access to the asset class on a regional and global basis. The creation of this investment and hedging tool is expected to encourage investor demand for sovereign credit.
Market makers in the Markit iTraxx SovX Western Europe index include the following: Bank of America; Merrill Lynch; Barclays Capital; BNP Paribas; Citi; J.P. Morgan; Morgan Stanley; and Nomura.
Historically, the trading of sovereign CDS has been limited to emerging markets, reflecting the credit risk associated with the government debt of these countries. An actively traded CDS market in industrialised sovereigns has now emerged as a result of the financial crisis and growing investor concerns relating to the solvency of developed economies.
Stephan Flagel, managing director and head of Indices at Markit, said: “The Markit iTraxx SovX Western Europe index will provide investors with an efficient, standardised trading tool to gain or hedge exposure to this asset class on a diversified basis.”
The Markit iTraxx SovX indices were launched in July 2009 and are calculated daily on a theoretical basis. Markit’s indices are objective, transparent and rules-based and daily closing prices are published on www.markit.com.
