Markit Group Limited

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Markit Group Limited
Markit logo.jpg
Founded 2001
Headquarters London
Key People Lance Uggla, CEO
Employees 3000+
Products Financial information for the credit derivatives market
Website www.markit.com

Markit Group Limited, founded in 2001, is a data provider that offers credit derivative pricing, information, processing and other services with the aim of helping clients reduce risk and improve operational efficiency. It provides data, valuations, trade processing and other services to more than 3,000 institutions across the financial markets including investment banks, hedge funds, asset managers, central banks, regulators, rating agencies and insurance companies. It offers the most actively traded credit swap indexes and pricing services in the market. [1]

In June 2014 Markit became a publicly traded company, listed on Nasdaq, with an IPO that valued the firm at $4.8 billion (£2.8 billion).[2] Barclays, Citigroup, Credit Suisse and Bofa Merrill Lynch were underwriters.[3] The IPO raised about $1.28 billion.[4][5]

In March of 2016, US-based business research provider IHS announced a deal to acquire Markit for an all-stock transaction valued at $5.8 billion, and valuing the combined company at more than $13 billion. Upon completion of the merger, the combined company will be renamed IHS Markit and will be headquartered in London, with certain key operations in Englewood, Colorado. IHS shareholders will own about 57 percent of the combined company while Markit shareholders will own the rest. [6][7][8] [9]

Background

Markit was founded by Lance Uggla with a group of TD Securities credit derivatives traders in 2001, in a barn in St. Albans, a suburb of London.[10]

Prior to its IPO in 2014, Markit was owned by the major global banks, including JPMorgan Chase & Co., Bank of America Corp., Citigroup Inc., UBS AG, Royal Bank of Scotland Group Plc, Deutsche Bank AG and Goldman Sachs Group Inc.

In July 2009, the U.S. Justice Department's anti-trust division started an investigation into the market for credit-default swaps to determine if the banks that own Markit have had unfair access to price information. The European Commission also began a parallel probe examining whether banks controlling Markit colluded to withhold market information to block the development of exchange trading of credit default swaps and other products. [11]

In September 2009, Markit and The Depository Trust & Clearing Corporation (DTCC) launched a joint venture called MarkitSERV, which combined the two organizations' electronic trade confirmation and work flow platforms to provide a single gateway for over-the-counter (OTC) derivative trade processing.[12]

In January 2010, it was announced that General Atlantic would take a $250 million stake in Markit. The 7.5 percent stake valued Markit at just over $3 billion.[13]

In January 2011, Markit acquired risk analytics firm QuIC Financial Technologies, Inc. (QuIC), introducing an integrated platform and solution for risk-related services.[14]

In April 2013, Markit acquired the remaining ownership of MarkitSERV from DTCC.

In October 2013, following a four-year probe into impeding competition, Bloomberg reported that the Justice Department’s antitrust division would not press Markit to alter its business practices because investigators’ concerns were being addressed by the 2010 Dodd-Frank Act, which includes rules for the $22 trillion credit-derivatives market. The European Commission is still preparing penalties in a parallel probe. [15]

Also in 2013 the company received a $500 million investment from Singapore state investor Temasek Holdings Pte Ltd, which valued Markit at about $5 billion.[16]

Products and Services

Markit has "privileged relationships" with 16 shareholder banks, giving it access to a data set spanning credit, equities and the broader OTC derivative universe.[17] Markit is also a member of six leading trade organizations, including the Association for Financial Markets in Europe (AFME) and the American Securitization Forum (ASF).[18]

Markit collects price data from derivatives dealers and sells that information to clients. That has given some transparency to a once opaque market where contracts are traded between investors rather than on a public exchange. The firm also has been a key player in the CDS index space. On Oct. 16, 2008, NYSE Euronext signed a license agreement to use Markit's iTraxx European CDS index and clear it through NYSE Euronext's Bclear platform. [19]

Markit has also worked closely with Creditex Group Inc., a subsidiary of the Intercontinental Exchange Group in the area of credit derivatives compression services, which basically finds offsetting CDS trades and offsets them in a company's portfolio. Both firms were selected by the International Swaps and Derivatives Association (ISDA) to provide infrastructure support commitments made by major market participants to the Federal Reserve Bank of New York in October 2008.

The Depository Trust & Clearing Corporation (DTCC), in conjunction with Markit, in August of 2011 announced the launch of its Loan/SERV Cash on Transfer service. According to the firms, the DTCC service, coupled with Markit’s loan settlement platform, gave the global syndicated loan market its first delivery-versus-payment (DVP) platform for secondary loan trading. According to the firms, in the previous trading process, there was no assurance that cash settled simultaneously with the change of ownership recorded by agent banks at the time of trade settlement. This left the seller on each trade at risk of no longer being the lender of record of the loan asset without ensuring that cash payment had been received. Cash on Transfer linked the buyer, seller, agent bank, trade processing platform and counterparty accounts, allowing for cash and legal ownership of the asset to move simultaneously on the agreed trade settlement date.[20]

On November 1, 2013, Markit announced that it was closing its over-the-counter equities reporting system because not enough banks were using it.[21]

Key People

References

  1. About Markit. Markit.
  2. Interview: Markit chief Lance Uggla - 'How I crunched the numbers to create a £500m City fortune'. London Evening Standard.
  3. Financial information provider Markit files for U.S. IPO. Reuters.
  4. Financial service provider Markit's IPO raises $1.28 bln. CNBC.
  5. Markit to list on NASDAQ. FTSE Global Markets.
  6. IHS and Markit to Merge, Creating a Global Leader in Critical Information, Analytics and Solutions. IHS.
  7. IHS Is Buying Markit in a Business Information Deal Worth $6 Billion. Fortune.
  8. IHS to buy data provider Markit, combined company to base in UK. Reuters.
  9. IHS and Markit to Merge, Creating Data Heavyweight. Wall Street Journal.
  10. IHS and Markit merge in $13bn all-share deal. FT.
  11. Credit Swaps Investigated by U.S. Justice Department. Bloomberg.
  12. Markit and DTCC launch OTC derivatives trade processing JV. Finextra.
  13. Press Release. Markit Group.
  14. Markit Acquires Risk Analytics Firm. Markit.
  15. Markit Group Said to Avoid U.S. Antitrust Claims as EU Proceeds. Bloomberg.
  16. Financial information provider Markit files for U.S. IPO. Reuters.
  17. About Markit. Markit Group.
  18. Industry Involvement. Markit.
  19. Liffe joins Markit on CDS Clearing. MarketsMedia.
  20. Press Release. Markit Group.
  21. Markit to Close OTC Equities Reporting Services. Wall Street Journal.