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Markit Plans New-Build Corporate Actions Platform Post Acquisition of DTCC’s GCA Validation Service

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Markit’s acquisition of DTCC’s Global Corporate Actions (GCA) Validation Service has been some time in the making – we first flagged it in Reference Data Review back in February – but it is a significant move for the company as it pursues a managed services strategy.

The deal will be finalised on 1 July, at which point all GCA Validation Service users, the company declines to say how many, will become Markit clients. Some 24 employees based in New York City and London will join Markit, and an outsourcing team of a similar number in Shanghai will also move to support the Markit service. The company intends to continue the existing service on the DTCC platform, including DTCC’s @Source corporate actions data for North America and feeds from IDC and Six Financial Information, while it builds a new corporate actions platform with functionality and data sources defined in response to customer demands.

Brian Okupski, managing director of reference data at Markit, explains: “We will not lift technology from DTCC and will instead build a new platform. This will take 12 to 18 months and when it is ready the DTCC legacy platform will go dark. For Markit, this is a step forward in managed services. It changes the model of banks around the world replicating the same processes and allows Markit to handle the process once for a nominal fee.”

Markit is not a newcomer to corporate actions and has been both a producer and consumer for some time. It offers a specialised service in the credit space, which it also consumes for forecasting purposes, and last year reached agreement with Euroclear Bank to distribute its Eurobond data, including corporate actions data. Okupski says these service will be among those included in the Markit platform as it is designed.

The company also has past form in managed services and has been running Markit WSO as a service bureau for syndicated loans for some years. Corporate actions is its second addition and the plan is to add more. It is also no stranger to DTCC, with which it has developed a number of joint ventures, including MarkitServ, a venture that combined the firms’ electronic trade processing services for OTC derivatives and was bought out by Markit in April 2013.

The outsourced GCA Validation Service is one of the largest providers of validated corporate actions data in the market, covering more than 1.4 million securities from over 170 countries. In 2012, the service handled over 967,000 corporate actions announcements and issued more than 10.5 million announcements on scheduled payments for fixed income securities. Okupski says: “Managing corporate actions in-house is high cost, so this service is an obvious value proposition for banks. As the service has been running for several years and has been developed to include elements such as redundancy, it can also offer an improved level of service.”

Looking forward, Markit intends to offer an expanded universe of data sources on the platform it is building and more timely notification of corporate actions. On a wider basis, Okupski concludes: “We are looking for additional services to offer as part of our managed services strategy for reference data. They could be acquired or developed in-house and could cover areas such as pricing and responses to regulatory requirements. We are also investigating the development of utility type concepts for reference data.”

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