London-based market data provider Markit is to expand by taking over the dealer-owned International Index Company (IIC), which produces the iTraxx credit indexes and the iBoxx bond indexes, and the dealer consortium CDS IndexCo, which produces the CDX credit index and the ABX, CMBX and LCDX structured finance indexes.
Markit did not reveal financial details of the deals, which, said Niall Cameron, the head of Markit's index management and equities business, would "put us at the heart of the global rates and structured finance markets". The IIC takeover has already closed, and the CDS IndexCo takeover is expected to close within the next 10 days.
Kevin Gould, head of data products and analytics at Markit in New York, also emphasised that the buyout will give investors an additional avenue to enter into any discussions. “We plan to lean on both sides of the equation to establish the best practices in index creation,” he said. The firm’s clients consist of approximately 1000 institutional investors.
By the first quarter of 2008, the firm plans to produce indexes that will track both global and regional credit markets, and possibly the Alt-A US mortgage sector. It will then develop indexes in new product classes, such as rates, foreign exchange, commodities and property, which Markit's Stephan Flagel described as "the holy grail".
The first new indexes will be released in January 2008, with many more to follow in the second quarter of the year, Cameron said.
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