MarkitSERV and Misys team for FX derivatives clearing service
CCP clearing is intended to reduce systemic risk in derivatives markets
OTC derivatives trade processing service MarkitSERV and banking technology provider Misys have partnered to create a service for CCP clearing of FX derivatives trades.
The partnership will allow customers of Misys’ Confirmation Matching Service to use MarkitSERV’s Swift interface, connectivity for FX clearing validation and clearing broker acceptance and its network to transmit trade notifications to CCPs. That means users will be ready to face upcoming regulation in Europe and the US, which requires the central clearing and reporting of the bulk of OTC derivatives trades.
Jointly owned by the DTCC and Markit, MarkitSERV combines the former’s Deriv/SERV with the Markit Wire trade confirmation platforms to cover all major asset classes including credit, interest rate, equity and commodity derivatives.
“Our partnership enables clients to view the status of FX trades requiring central clearing, through a single window,” said Gilmore Bray, director of Misys global managed services. “This eliminates any infrastructure investment or ongoing development cost to comply with the regulatory requirements.”
The aim of CCP clearing is to reduce risk by removing the possibility that a default by a major bank, such as Lehman Brothers in 2008, could paralyse financial markets. A CCP acts as a repository of risk; it is designed to hold sufficient collateral to cover a major default, even by multiple institutions.
Earlier this month, Polish clearing house KPDW CCP installed technology from Nasdaq OMX to help it meet the European Commission’s new EMIR rules on OTC derivatives, which are ostensibly due to take effect next month.
