Markit announced a new freely available licence for the Markit Reference Entity Database (RED), which is aimed at smaller buy-side firms.
Under the terms of the new licence, asset managers that have small credit default swap (CDS) trading volumes and that use DTCC1 Deriv/SERV for trade confirmation will gain access to market best practice in CDS trade processing.
Markit RED is the industry standard for reference entity and reference obligation identifiers used in the CDS market that reduces legal and operational risk in trading, documentation and trade settlement. The service uses legal representatives in over 100 countries to source and scrutinize all relevant documentation, providing subscribers with a complete understanding of each entity.
The new initiative is aimed at supporting the commitments made by the operations management group (OMG) to the Federal Reserve Bank of New York last March, reinforcing Markits commitment to bring greater operational efficiency to the OTC derivative markets.
The OMG, which represents the major market participants, has pledged to improve OTC derivative trade processing by taking steps including the universal use of standard reference data.
"Markit RED plays a critical role in the CDS markets," said Ed Chidsey, director of Markit RED. "The service is used by all major market makers and the vast majority of large buy-side firms, and we are keen to encourage the broad buy-side community to adopt RED. We recognize that one size doesnt fit all and have now developed a new licence for the smaller firms. This will allow them to operate consistently with the rest of the market, and will help the industry achieve the commitments made to the Fed in March this year.