Markit has acquired International Index Co. and said that it has agreed to acquire CDS IndexCo. in what will be the biggest and most important acquisition the company has made to date, according to Kevin Gould, executive vice president at Markit. He announced the strategic moves at a briefing early this morning. The buyout of CDS IndexCo should be completed by the end of the week, Gould said.
The acquisitions are meant to globalize best practices under one platform, including one brand, one set of rules to trade, one delivery system and one point of contract, Gould said, stressing that having all the indices under one roof will increase market transparency. However, they are not the result of the pricing dislocation in the market, he said. He added that the company had been in talks with CDS IndexCo and International Index Co. before the onset of the credit crunch.
Markit also floated ideas surrounding the creation of an Alt-A index, which it speculated could take place next year, as well as the creation of a Global Credit Index where traders could take one overall position on global credit conditions, instead of five individual trades with five different settlement processes.
As for the future of the ABX Index, due to the lack of issuance in the second half of the year, Markit is waiting until mid-December to assess whether or not there will be a 2007-2 series. However, there is still demand for a new series, because "people still want to hedge their exposure," said Ben Logan, managing director, structured finance at Markit.
"Maybe we will have to tweak the index," Gould said