Post-Trade Providers Connect to CCPs

Terry Flanagan

MarkitSERV builds direct link to SwapClear.

Providing straightforward connectivity to clearing houses for market participants clearing OTC derivative transactions has become a vital component of post-trade processing.

MarkitSERV, an electronic trade processing service for OTC derivative transactions, has launched connectivity and workflow tools in support of LCH.Clearnet Ltd’s expanded service for SwapClear, its interest rate derivatives clearing service.

The new workflow functionality will benefit US clients subject to the Dodd-Frank Act. For example, MarkitSERV now enables asset managers to select multiple FCMs on a single block trade, have block trades cleared by SwapClear on a split-by-split basis, and “anonymize” sub-accounts and FCMs on any given trade.

In addition, executing brokers can, for the first time, use MarkitSERV to designate their own clearing member for trades cleared through SwapClear.

The introduction of new workflows will help institutions to comply with the Dodd-Frank Act and to clear trades using FCMs at LCH and elsewhere. As the universe of cleared products expands, MarkitSERV will continue to provide clients with the single-point of connectivity they need to transact with multiple counterparts and to direct trades to multiple CCPs and trade repositories, the company said.

“As Dodd Frank becomes enacted, MarkitSERV has the workflows to handle SEF- and non-SEF trades and cleared and non-cleared trades,” Henry Hunter, head of product management at MarkitSERV, told Markets Media.

MarkitSERV’s middleware platform, in addition to providing trade affirmation, confirmation, and reconciliation services, acts as a universal adaptor which links dealers and about 2000 buy-side firms to execution venues, clearinghouses and trade repositories.

“By connecting to MarkitSERV market participants avoid the need to build connections or use multiple proprietary connections to counterparts, CCPs and SDRs,” said Hunter. “Moreover, users have the benefit of a single platform to handle the full scope of post-trade requirements of OTC derivatives transactions, regardless of asset class.”

MarkitSERV’s enhancements are being made available in conjunction with SwapClear’s launch today of new features, which include expansions to its service for buy side firms and futures commission merchants (FCMs).

MarkitSERV has been certified by, or established links to, LCH.Clearnet, CME, SGX and IDCG for direct submission of interest rate derivative transactions for clearing; to CME, ICE Clear Credit, ICE Clear Europe and Eurex for credit derivatives; and to LCH.Clearnet, CME and SGX for foreign exchange derivatives. MarkitSERV is also engaged with over a dozen other CCPs worldwide and will link to more as they launch.

MarkitSERV has been an important conduit for clearing interdealer swaps since 2004, when it began delivering interdealer interest rate swap trades to SwapClear, the company said.

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