Sell-Side Technology Awards 2014: Best Sell-Side Newcomer (Vendor or Product) — Markit

A balance-sheet management and optimization tool for margin, risk-weighted assets (RWAs), and valuation adjustment calculations, IRM allows front-office staff to price intermediation of a trade, determine the appropriate central counterparties (CCPs) and clearinghouses to work with, which CCPs to backload with certain trades, and other all-in costs including default capital or funding of un-cleared initial margin. It is particularly useful for pricing novation packages and renegotiation of collateral agreements—two areas that have become more important in the current sell-side environment—and includes a messaging function that exports incremental cost considerations, known as “inception pricing,” for any new trade to all relevant desks.

The capability runs on the Markit Analytics Engine, a multi-dimensional vector calculator that utilizes supercomputing concepts that was acquired in 2011 from start-up vendor QuIC Financial Technologies. Targeting financial engineers, the engine emphasizes the ability to parse out underlying complex mathematics from financial modeling as a central design tenet, allowing the engineers to build plug-ins on top of the analytics framework quickly and efficiently via libraries that feature flexible contract- and scenario-definition languages, dedicated scripting, and an in-memory multidimensional expression (MDX)-based cube reporting level.

IRM’s first and biggest client for the product to date, Lloyds Banking Group, is set to be joined by several other sell-side firms this year with which the vendor is now in discussions. That goal seems sensible, because Markit has often proved itself pretty good at figuring out what the future looks like—one need only look at its rapid success with Markit EDM, formerly Cadis, as proof. Still, this win might be just a little sweeter. With far less splash this time around, Markit has demonstrated that the most solid industry mainstay can learn new tricks, and can even do so in a space that is—to say the least—highly saturated.