Markit Launches Netting Synchronization Service for Cleared OTC Derivates

Service to facilitate automated netting for OTC derivatives and provide single data source for trades.

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London-based Markit plans to roll out the service to further clearing houses.

The service, currently live with LCH.Clearnet SwapClear, is designed to automatically update banks' risk systems after netting and compression activity occurs at relevant clearing houses. This gives users a single source for data that can be used to cancel trades terminted at clearing houses and create new trades to represent residual positions resulting from the netting process.

It will also provide functionality to reconcile all OTC derivatives trades, cleared and uncleared, with the data maintained centrally by Markit's trade-processing service for OTC derivatives, MarkitSERV.

"Netting is a critical process for the market, but it can create another data management burden and source of operational risk for participants," says Claire Lobo, managing director and head of business development for MarkitSERV at Markit. "By synchronizing with clearing houses, we update firms in real time about changes to their positions, making it efficient for them to scale their use of netting."

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