The UK Financial Services Authority (FSA) has picked Markit to supply pricing information on credit derivatives.London-based Markit will provide the regulator with pricing benchmarks on credit default swaps (CDS) and access to its reference entity database. The FSA will use the information for "research and regulatory compliance purposes," Markit said.
In particular, the FSA could use the CDS market to provide advance warning of problems at the underlying companies, said Penny Davenport, Markit's director of product management. "The CDS market is a very effective barometer of a company’s financial health and acts as an early warning signal of trouble brewing," she added.
The FSA, however, is also set to use the data to monitor the activities of hedge funds and investment banks, with specific emphasis on ensuring there is no conflict of interest between their lending activities and credit derivatives trades.
More on Infrastructure
US regulatory concerns about liquidity of government securities collateral could be resolved by access to the Fed’s discount window, CCP officials say
High-frequency traders have been viewed with suspicion for some time. Now critics claim exchanges are conspiring with the traders to develop tools that benefit them and disadvantage ordinary investo...
The benefits of local trade repositories outweigh the possible disadvantages of multiple reporting requirements, says executive director of HKMA’s financial infrastructure unit
Sign up for Risk.net email alerts
Sponsored video: MarketAxess
Sponsored video: Tradeweb
Multifonds talks to Custody Risk on being nominated for the Post-Trade Technology Vendor of the Year at the Custody Risk Awards 2014
Sponsored webinar: IBM Risk Analytics
There are no comments submitted yet. Do you have an interesting opinion? Then be the first to post a comment.