Markit has connected its MarkitSERV trade processing service for OTC derivatives to its portfolio valuations service, allowing trades processed by MarkitSERV to be captured as they are confirmed, portfolios to be updated and valuations made without the need for a separate trade feed. As well as increasing operational efficiency, the connectivity is expected to reduce costs and discrepancies in trade details.
The first phase of the integrated service covers interest rate swaps, swaptions and overnight index swaps and is available immediately. Following phases are planned to cover additional asset classes, including more complex instrument types, and map these to the hosted portfolio valuations service.
Padmesh Thuraisingham, managing director of portfolio valuations at Markit, explains: “We have combined two different platforms designed for two different purposes for the benefit of our clients. Existing clients who are using MarkitSERV as a trade confirmation platform and then sending portfolios to us for valuation can now use MarkitSERV to feed trade economics into the valuations platform, making the valuations process far more efficient. Clients that are using MarkitSERV to confirm OTC derivatives, but do not use Markit’s valuation service, can now use the valuation service without having to build a trade feed into the platform.”
As well as providing greater efficiency, reduced costs and more consistent trade data, the connectivity will help to solve problems such as the valuation of trades that are confirmed between the time a firm sends a portfolio for valuation and the time Markit delivers a valuation report. By permissioning portfolios to be automatically updated using the feed from MarkitSERV, all trades captured before valuations are calculated are included in the portfolio.
The connectivity could also support the confirmation, capture and valuation of, perhaps, one trade at a time, or a few trades, at a time after a complete portfolio has been valued, although Thuraisingham notes that this is not yet standard market practice.
The integration of real-time trade data from MarkitSERV into the derivatives portfolio valuations platform follows the recent integration of the valuations platform with the company’s risk platform, moves designed to integrate Markit’s data analytics, processing and valuations capabilities, and deliver an efficient and full range of calculation and reporting services.
Thuraisingham concludes: “Whatever clients have in their portfolios we can value and we can make it easy for them to communicate with the platform and access additional services. By integrating platforms we can move towards being a one-stop-shop. This is important for clients that want to reduce costs and complexity, and are looking to vendors to consolidate their platforms. We are in a good position here.”