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Press Room

DTCC and Markit to Form Strategic OTC Derivatives Partnership

Market Leaders in Trade Processing Team Up to Reduce Risk, Improve Efficiency

New York and London, July 21, 2008 – Markit and The Depository Trust & Clearing Corporation (DTCC) today announced the formation of a new company that will combine the strengths of Markit’s front- and middle-office trade processing services with DTCC Deriv/SERV’s back-office leadership in post-trade confirmation and matching services.

In response to customer demand for a more secure, reliable and streamlined operational environment, the new company will provide a single gateway for confirming over-the-counter (OTC) derivative transactions globally. This will allow buy-side and sell-side OTC derivative market participants to confirm trades and to gain access to additional services provided by Markit and DTCC through a common portal.

The new company will comprise Markit’s recently acquired Markit Wire platform (formerly SwapsWire) as well as its other trade processing services such as Markit Trade Manager, Markit Tie Out, and Markit PortRec. DTCC will contribute its Deriv/SERV matching and confirmation engine, and its AffirmXpress, MCA Xpress and Novation Consent services. Additional services that will not become part of the new company include Markit’s data and valuation services and DTCC’s downstream Trade Information Warehouse, centralised settlement and payment netting services.

This initiative should accelerate the adoption of electronic processing solutions across the rapidly growing, $454 trillion, OTC derivative market where approximately 50% of transactions are still confirmed on paper. The new company will be quicker to market, provide better client solutions and rationalise infrastructure.

“Both DTCC and Markit have been instrumental in the OTC derivative community’s efforts to strengthen the operational infrastructure of this dynamic market,” said Eraj Shirvani, chairman of the International Swaps & Derivatives Association (ISDA®) and managing director and co-head of European Credit at Credit Suisse. “This alliance is a groundbreaking combination that reaches across borders and asset classes to provide a service that will help a wide range of market participants achieve greater certainty in their transaction processing.”

The new company will be jointly owned by DTCC and Markit, and will be governed by an 11-member board of directors¹. Michael Bodson, executive managing director for DTCC’s business management and strategy overseeing all DTCC business lines, will be chairman of the new company. Jeff Gooch, executive vice president of Markit, will be the new company’s chief executive officer.

“Since launching Deriv/SERV’s matching and confirmation service in late 2003, DTCC has been committed to helping the OTC derivatives community automate transaction processing and build a robust infrastructure in this rapidly growing market. This important new strategic partnership with Markit reflects our ongoing strategy of aligning with other key service providers as a way to help the industry meet its goals and to better serve our customers,” said Michael Bodson.

“By combining the individual strengths of Markit’s trade processing services and DTCC’s Deriv/SERV, we are taking a major step forward in addressing the calls from global regulators and customers for a fully integrated system for processing OTC derivatives. We believe the time is right for consolidation around a combined framework to address the challenges of rapid growth, operational risk and high costs in the OTC derivative markets,” said Lance Uggla, chief executive officer of Markit.

In addition to facilitating greater industry adoption of electronic confirmation, the new company will offer automated trade affirmation, trade allocation and novation consent solutions to the market on a cross-product basis. It will initially support both DTCC’s and Markit’s confirmation platforms.

The new company will be headquartered in London, with a second major centre of operations in New York City, and representative offices in Europe and Asia. The combined business will have over 1,100 financial institutions as customers, and annual transaction volumes of over 7 million across the OTC interest rate, credit and equity derivative markets.

The DTCC-Markit agreement will become effective following completion of due diligence, regulatory filings and approval by relevant global regulators, including those in the U.K. and U.S. The name of the new company will be announced at a later date.

¹ The board of directors will comprise seven members selected from the industry, and four members selected from management at the respective parent companies.

Notes to Editors:

Biographies and photos

Please click on the link below for Michael Bodson’s biography and photo:
http://www.dtcc.com/about/governance/bio_bodson.php

Please click on the link below for Jeff Gooch’s biography:
http://www.markit.com/information/about/executive_management/jeff_gooch.html
Photos available on request.

About the new company

The new company will comprise Markit’s recently acquired Markit Wire platform (formerly SwapsWire) as well its other trade processing services such as Markit Trade Manager, Markit Tie Out, and Markit PortRec. DTCC will contribute its Deriv/SERV matching and confirmation engine, and its AffirmXpress, MCA Xpress and Novation Consent services.

About Markit

Markit is a financial information services company with more than 700 employees in Europe, North America and Asia. Over 1,000 financial institutions use our independent services to manage risk, improve operational efficiency and meet regulatory requirements. For more information, see www.markit.com

Markit Trade Processing
Markit Trade Processing (MTP) is an electronic, cross-asset class solution for OTC derivative post-trade processing, including affirmations, confirmations and portfolio reconciliation. MTP provides both buy-side and sell-side firms with the ability to increase counterparty transparency, reduce risk, and streamline post-trade operations.

About DTCC

The Depository Trust & Clearing Corporation (DTCC), through its subsidiaries, provides clearance, settlement and information services for equities, corporate and municipal bonds, government and mortgage-backed securities, money market instruments and over-the-counter derivatives. In addition, DTCC is a leading processor of mutual funds and insurance transactions, linking funds and carriers with financial firms and third parties who market these products. DTCC’s depository provides custody and asset servicing for 3.5 million securities issues from the United States and 110 other countries and territories, valued at $40 trillion. Last year, DTCC settled more than $1.86 quadrillion in securities transactions. DTCC has operating facilities in multiple locations in the United States and overseas. For more information on DTCC see www.dtcc.com.

DTCC Deriv/SERV
DTCC is a an industry owned organization. It formed a new OTC derivatives subsidiary, DTCC Deriv/SERV LLC, that became operational in June 2003, initially to match and confirm trades in credit derivatives. DTCC Deriv/SERV processed over 5.8 million transactions last year for 25 global dealers and more than 1,100 buy side customers. It has also expanded its support to other OTC instruments.