Following its announcement at the start October that it would be partnering with Standard & Poor’s (S&P), Markit indicates the two vendors are now working together to create a universal identification system for the loan market. The vendor is partnering with S&P’s Cusip Service Bureau with the aim of improving transparency and liquidity in the syndicated loan market and will facilitating the clearing and settlement of trades, says Armins Rusis, executive vice president and global co-head of fixed income at Markit.
“Markit’s partnership with S&P strengthens our drive to introduce a comprehensive, universal identification system for the loan market. The initiative will unite the marketplace and facilitate STP throughout the loan markets,” he elaborates. The vendor therefore hopes the partnership will ensure ease of implementation and will encourage broad acceptance of the new universal identification system in the marketplace.
Jim Taylor, managing director of Cusip Global Services, adds: “Our track record of success in providing numbering services combined with Markit’s high quality loan data and customer relationships made us natural partners on this initiative.”
The identifiers will encompass a new participant identification system for loan market entities, which will be available later in December. It will also cover loan Cusips, which will be expanded in early 2009 to cover a greater number of facilities including links to contract level identifiers, say the vendors. Loan Cusips are issued by Cusip Global Services, managed by S&P on behalf of the American Bankers Association.
Cusip Service Bureau began work on the loan identification space six years ago; when it took the decision to partner with the Loan Syndications and Trading Association (LSTA) to extend the nine digit alphanumeric Cusip codes to US syndicated loans and provide descriptive data. At that point in time, Markit positioned itself in direct competition with the S&P division; however, the vendor has decided against establishing a rival ID service.
The vendor reckons the decision to partner rather than compete will be beneficial to the market by expediting the delivery of a broader solution for the market. Under the agreement, Markit will provide the Cusip Service Bureau with information on borrowers, other participants and contracts in the syndicated loan market, while the Cusip Service Bureau will be issuing the identification codes. However, there has been no decision made thus far on how the new IDs will be branded.
LSTA is also supportive of Markit’s decision to work in collaboration with Cusip Service Bureau, says Bram Smith, interim executive director of the LSTA. He describes the move as a “critical step toward quickly bringing standardisation to the syndicated loan market.”
Steve Ewald, a principal at Bank of America, adds: “Markit and S&P are to be applauded for their collaboration on the global identifier solution. Their joint initiative will promote progress toward a much needed automated end to end settlement processing solution for the syndicated loan product.”
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