Markit has announced the launch of a service to help banks automatically update their risk systems after netting and compression activity at their clearing houses.
The service, now live, is with LCH.Clearnets SwapClear and will expand to other clearing houses.
Netting exposures within a clearing house helps firms reduce the capital and operational costs associated with OTC derivatives. With Markit, firms have a single source for the data they need to cancel trades terminated at clearing houses and create new trades to represent residual positions resulting from the netting process. Firms also gain the ability to reconcile all OTC derivatives trades, cleared and uncleared, with the data maintained centrally by Markits trade processing service for OTC derivatives, MarkitSERV.
Markit can also send regulatory reports to update trade repositories on behalf of customers, where applicable.
Claire Lobo, managing director and head of business development for MarkitSERV at Markit, said: Netting is a critical process for the market but it can create another data management burden and source of operational risk for participants. 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.
MarkitSERV provides market participants and execution venues with a single point of access to 16 clearing houses worldwide and an integrated, multi asset class service for the management of trade confirmation, clearing, allocation of block trades and regulatory reporting.
