Markit's Red now free to low-volume buy-side firms

Firms with low credit default swap (CDS) trading volumes that use the Depository Trust and Clearing Corporation’s DerivServ platform for trade confirmation will not be charged a fee for using the database, according to the terms of the new licence.

Markit Red is used to identify reference entities and reference obligations for CDS contracts, reducing legal and operational risk. The service uses legal representatives in over 100 countries to source and scrutinise all relevant documentation to provide subscribers with an understanding of each entity.

Markit says this initiative aims to support the commitments made in March to the New York Fed by the Operations Management Group (OMG), a body of 18 dealers formed in December to address the issue of confirmation backlogs in over-the-counter markets. These commitments include a target of accurately submitting nine-digit Red codes on 100% of index trades and 90% of single-name trades by July 2008.

"We are keen to encourage the broad buy-side community to adopt Red. We recognise that one size doesn’t fit all and have now developed a new licence for the smaller firms. This will allow them to operate consistently with the rest of the market, and will help the industry achieve the commitments made to the New York Fed in March this year,” said Ed Chidsey, director of Markit Red.

See also:
Regulators push for operations changes
Playing catch-up