Markit has developed an extension to its Reference Entity Database (RED) product, RED for Equities. The solution is already in use by clients.
The vendor reports a growing interest in RED from clients whose primary interest is not credit derivatives but who want to use RED, which Markit says has set the standard for entity identification, as a mapping tool. A key area of use outside credit is equities.
Says John Price, managing director, equities at Markit: “People want to be able to see how instruments in different asset classes relate to one another. So for example, if you saw the implied volatility of an equity put option increasing, you might want to see how the corresponding credit spread was reacting. People need an accurate common entity identifier to link the performance of all the related assets issued by a particular company.”
RED for Equities enables users to uniquely identify issuers in the equity space while using the same 6-digit RED code for the credit default swaps, Price says. This enables users to see the behaviour of equity instruments against referenceable bonds and CDSs.