OTC derivatives pricing vendor Markit Group says Calypso Technology, a provider of capital markets trading applications, is to integrate Markit Trade Processing into its software platform.
The alliance aims to improve the processing of over-the-counter (OTC) derivative transactions for clientsof both firms, whatever the asset class or complexity of the instrument. Markit and Calypso’s users, which include the largest fund managers and dealers, will now have access to a single, automated service.
Markit says users will be able to pass data seamlessly from Calypso’s trade capture system to Markit’s trade processing platform, automating a variety of post-trade services including trade day affirmation, DTCC trade confirmation, non-STP (Straight Through Processing) confirmation workflow and portfolio reconciliation. Markit Trade Processing also aims to facilitate novation, termination and dispute resolution via Markit Connex, a secure instant messaging service.
The U.S. Federal Reserve met dealers and their regulators last month to discuss settlement backlogs and operational risks in the banks’ OTC derivative businesses. Progress in tackling trade processing problems in the credit derivatives market was reviewed, while the need to improve operations in the equity derivatives market was highlighted.
“Markit is very much focused on helping the industry achieve greater operational efficiency at a time of dramatic market growth in the OTC derivative markets and increased regulatory concern over the infrastructure supporting these markets,” says Leo Schlinkert, Executive Vice President and Head of Trade Processing and Distribution at Markit. “By linking our platform to industry utilities and leading vendors such as Calypso, we are able to pave the way for a more efficient marketplace. This will allow our clients to achieve true STP, making costly errors and backlogs a thing of the past.”
Gerard Rafie, VP of Marketing at Calypso, says the firm was attracted by the fact Markit covers all OTC derivative products and asset classes. “We are delighted to be working with them to help address the operational problems that are besetting the privately traded marketplace, and to encourage the smooth development of these fast-growing, innovative markets,” he says.