Following a custom implementation at Rabobank International, Standard & Poor’s has launched Reference Entity Link, aimed at the credit default swaps marketplace. The service, which draws upon Markit’s Reference Entity Database (RED) provides full issuer and issue coverage behind each CLIP code.
CLIP codes – named for Cusip-Linked Entity Markit Code (Reference Data Review, March 2005) – link a business entity to an associated issue. The nine-digit CLIP codes are mandatory for dealers matching on the Depository Trust & Clearing Corp. (DTCC). Standard & Poor’s operates the Cusip Service Bureau, which assigns Cusip codes to issues. S&P also runs the Association of National Numbering Agencies (ANNA) Service Bureau, in a joint venture with Telekurs (USA), the ISIDplus database, again with Telekurs and Crosswalk, an entity-issuer link, with both Telekurs and Dun & Bradstreet.
Reference Entity Link now provides access to more than 100,000 issue and issuer CUSIP and CINS numbers for the entities in the Markit RED database. The service helps users understand the relationship between entities and their obligations in the credit default swaps marketplace. Users can then understand the credit exposure of each CLIP entity, eliminating the need for manual issuer to issue cross-referencing.
The new service is being made available only to existing clients of Markit’s RED database. Markit RED is used for confirming reference entities and their reference obligation ‘pairs’ and provides audited legal reference names for approximately 1,800 entities, covering 2,500 issues.
Introducing the service at the FISD’s World Financial Information Conference in Rome this month, Darren Purcell, associate director for European securities classifications at Standard & Poor’s, said the solution helped Rabobank deal with a number of issues in its credit trading department. The Dutch bank, Purcell said, was having difficulty linking individual Cusips to multiple issuers. Working with S&P and Markit, the bank was able to eliminate this highly manual task.
Now, Rabobank has access to more than 100,000 issuer and issue CUSIP and CINS numbers for the entities in the Markit RED database. This data allows it to link specific Cusips to a particular business entity, and identify the credit exposure of each CLIP entity.
Standard & Poor’s will be offering Reference Entity Link as an optional service to RED clients. Reference Entity Link is updated weekly and delivered via FTP. It can also be integrated into in-house trading, risk management and other applications.
Meanwhile, Markit has signed up integrated its credit default swaps pricing into Quantifi Inc.’s credit models. Quantifi provides advanced credit derivatives models, pricing tools and risk applications. The company will use Markit’s pricing on 2,700 individual entities and tiers of debt, which is drawn from daily price contributions from more than 50 dealing firms.