MarkitSERV, the most widely-used electronic trade processing service for over-the-counter (OTC) derivative transactions, is ready with connections to multiple clearinghouses to help the swaps industry comply with the first US Commodity Futures Trading Commission (CFTC) mandate to clear OTC derivatives.
Even before regulatory mandates, the network and trade management tools provided by MarkitSERV support a significant portion of OTC derivatives transactions that clear. In February, a total of 148 buy-side firms and swaps dealers used MarkitSERV to match and process approximately 190,000 cleared OTC swap trades. Those transactions included nearly 9,000 cleared buy-side trades (transactions in which at least one party is not a clearinghouse member).
Beginning today, institutions categorized under CFTC rules as swap dealers, major swap participants or active funds are required to centrally clear several types of interest rate swaps (in four currencies) and certain credit default swap index trades.
Henry Hunter, Head of Product Management at MarkitSERV, said: “When it comes to complying with regulatory deadlines from the CFTC and regulators worldwide, MarkitSERV is supporting the majority of OTC derivative market participants. Our cross-asset class network links traders and execution venues to clearinghouses and trade reporting facilities, making it much more straightforward to manage, clear and report OTC derivatives.”
MarkitSERV provides a single point of connectivity for swap market participants to route trades to eight major clearinghouses that are registered with the CFTC (or have registration pending) as derivatives clearing organizations (DCOs) for OTC credit and rates products and also provides trade parties with real-time updates of clearing registration status and clearing broker take-up. MarkitSERV automatically determines for trade parties whether a trade is subject to mandatory clearing based on Regulation 50.4 (which defines which classes of swaps must clear), Regulation 50.25 (which defines the compliance schedule for swap market participants) and the MarkitSERV database of counterparty jurisdictions. MarkitSERV also supports mandatory and voluntary real-time trade reporting and reporting of primary economic terms for both cleared and non-cleared trades.
The CTFC-registered DCOs to which MarkitSERV is connected are: CME, ICE Clear Credit, ICE Clear Europe, LCH.Clearnet LLC (SwapClear US), LCH.Clearnet Ltd (SwapClear UK), and Options Clearing Corp (OCC). MarkitSERV is also connected to Eurex Clearing AG and LCH.Clearnet SA (CDSClear), both of which have DCO registrations pending with the CFTC.
MarkitSERV first provided routing for central clearing in 2004 and is today connected to 12 clearinghouses worldwide.
MarkitSERV provides a comprehensive, venue-neutral, global middleware solution for OTC derivatives trade processing for cleared and non-cleared trades, across electronic execution venues and off-facility execution in credit, rates, equity and foreign exchange derivatives. With a connection to MarkitSERV, market participants have efficient and simplified access to key pieces of market infrastructure without having to incur the duplicative costs and risks of building and maintaining their own direct connections.
