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BofA Merrill Lynch, Citi and Goldman Sachs Join Markit's Credit Checking Hub

Several top dealers have signed up for Markit's Credit Centre, a hub solution for OTC derivatives participants to manage credit lines between FCMs and their clients and venues.

Markit said that BofA Merrill Lynch, Citi, and Goldman Sachs are the first futures commission merchants (FCMs) to agree to use MarkitServ Credit Centre, the pre-trade credit checking hub solution for the OTC derivatives market.

Markit is taking a central hub approach to providing pre-trade credit limit checks on derivatives transactions to all participants in the OTC derivatives markets.

"We are pleased that BofA Merrill Lynch, Citi and Goldman Sachs are the first of many FCMs to agree to adopt Credit Centre as the mechanism to share credit line information with their clients and trading venues," said Jeffrey Maron, managing director at Markit, in the release.

However, different venues may launch their own pre-trade credit checking methods. Today, Tradeweb announced that it has completed an electronic pre-trade credit check between a buy side client and a futures commission merchant.

[For more on Tradeweb Completes Electronic Pre-Trade Credit Check on Buy Side Swaps Trade, Ivy Schmerken's related story.]

“Credit Centre’s low-latency system for managing credit lines creates efficiency in our market and MarkitServ has established itself as a provider participants can turn to for industry-wide solutions,” commented Robert Burke, managing director and head of Global OTC Clearing at BofA Merrill Lynch, in the release.

Since buy side firms will be trading across different swap execution facilities SEFs and voice brokers, they want to optimize their credit lines. “ Maximising our flexibility in how we trade and where we clear is extremely important to us. Using Credit Centre to view and optimize our credit lines helps us operate more efficiently in the new world of derivatives trading,” stated Matthew Lynes, portfolio manager at Aberdeen Asset Management in the release.

In the same release, Antonio Reyes, managing director and global head — Electronic Execution OTC and Listed derivatives products at Citi, said, “Mandates to clear and electronically trade OTC derivatives require new networks, information flows and technology. A system that provides pre-trade clearing certainty is a priority for our changing market.”

According to Marron, “The industry understands that providing clearing certainty is one of the challenges resulting from Dodd-Frank."

MarkitServ Credit Centre is meant to provide clearing certainty for trades executed in electronic and hybrid marketplaces. “Having clearing certainty is an imperative for us. Credit Centre helps to meet our clients’ needs and gives us the flexibility to execute with confidence whether trades get done through voice or electronic platforms,” said Ron Levi, COO of GFI in the release.

Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio

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