MarkitSERV Launches Interdealer Trade-Date Clearing Service for CDS

MarkitSERV, the electronic trade-processing service for OTC derivative transactions jointly owned by Markit and the DTCC, has launched trade-date clearing for inter-dealer credit default swap (CDS) trades through its trade matching and routing service.

Late last week, Deutsche Bank, JP Morgan and Morgan Stanley were the first institutions to use MarkitSERV's new system to match and route credit trades for clearing, in close to real time. The trades were cleared by ICE Clear Credit.

The majority of cleared CDS trades are currently cleared in batches on a five-day cycle. MarkitSERV's real-time trade processing platform allows each trade to be individually routed to the clearinghouse and cleared immediately following execution.

Proposed regulation in the US and Europe is likely to mandate clearing of eligible OTC derivatives on a timely basis.

Using the new service, counterparties approve and route each trade for clearing immediately after execution. Trade details submitted electronically by counterparties to MarkitSERV are verified, matched and transmitted directly to the clearinghouse.

After the trade is successfully cleared, parties are notified via the MarkitSERV service. MarkitSERV also supports real-time submission of trades by inter-dealer brokers and electronic trading platforms. More than 100 execution venues submit trades through MarkitSERV already in credit, interest rate, and equity derivative markets.

Stuart McClymont, managing director, head of market initiatives and business architecture at Deutsche Bank, says the new service is a significant milestone for the OTC derivatives industry. Delivering infrastructure that can support both cleared and non-cleared transactions on a single platform maximises the control and efficiency around OTC derivative processing, says McClymont.