Tokyo Stock Exchange Group (TSE Group) and Markit Group have signed a cooperation agreement, under which the two parties will work together to examine the feasibility of potential business alliances for areas including valuations and indices. The memorandum of understanding, which was signed on 28 October, includes the foundations for the establishment of a joint venture company if necessary.
The agreement includes the potential for the joint promotion and distribution of appraisal and valuation services for financial instruments and the development of new indices in the Japanese market and promotion of utilisation of various indices, including ones owned by Markit, for actual trading activities. It also includes distribution tie-ups for information contents and cooperation to promote the improvement of the infrastructure of post-trade operations in the OTC derivatives market in Japan.
Atsushi Saito, president and CEO of the TSE Group, explains: “Recently, there have been growing demands for a more transparent evaluation of portfolios, as well as more reliable and efficient post trade operations for financial instruments. This opportunity will allow us to examine the possibility of business cooperation in such areas as providing objective appraisal services for financial instruments, developing new financial products using knowledge of indices owned by the company, and promoting electronic post-trade administration for OTC derivatives.”
Katsumi Mizutani, president of Markit Group Japan, adds: “Proper delivery of price information for the assets with less liquidity is getting more important and market participants desired to obtain a means or solution to prepare for volatile market conditions. At the same time, promotion of STP processing in OTC post-trade activities will contribute a lot to reduce operational risks in the financial institutions. It is important to develop momentum in the market by making this announcement of a partnership between two major companies in the Japanese capital market.”
TSE and Markit have indicated that they will establish a taskforce to conduct discussions on the feasibility of these projects and will make an announcement on the details when a specific agreement has been reached.