Company type | Public |
---|---|
Nasdaq: MRKT | |
Industry | Financial services |
Founded | 2003 |
Defunct | 12 July 2016 |
Fate | in 2016 merged with IHS Inc. to form IHS Markit |
Successor | IHS Markit |
Headquarters | London, United Kingdom |
Number of locations | 21 offices |
Area served | Worldwide |
Key people | Jerre Stead (CEO IHS Markit) & Lance Uggla (president IHS Markit) [1] |
Products | Financial information Financial processing Financial services Financial solutions Market data vendor |
Revenue | US$ $1.5 billion [2] |
Number of employees | 4,500 (October 2015) |
Divisions | Information Processing Solutions |
Website | www |
Markit was a British financial information and services company that focused on credit derivative pricing. It was founded in 2003 and merged in 2016 with IHS to form IHS Markit.
Prior to its merger it had 4,500 employees in 21 offices worldwide and was as an independent source of credit derivative pricing. [3] The company provided independent financial data, trade processing of derivatives, foreign exchange and loans, customised technology platforms and managed services. The company aimed to enhance corporate transparency, reduce financial risk and improve operational economic efficiency. Its client base included institutional participants in the financial marketplace.
On 12 July 2016, Markit and IHS Inc. merged in an all-stock merger of equals to form IHS Markit. [4] [5] IHS Markit later merged with S&P Global on 28 February 2022. [6]
Markit was founded in 2003 by Canadian Lance Uggla [7] [8] in St Albans, outside London, as Mark-it Partners to provide daily credit default swap (CDS) pricing. [9]
Markit's credit derivative data sales rose during the subprime mortgage crisis in 2007 and later years. [10]
In September 2009, Markit and Depository Trust & Clearing Corporation (DTCC) launched MarkitSERV, a joint venture to provide over-the-counter (OTC) derivative trade processing. [11]
Totem Valuations, a supplier of consensus valuations and month-end data, was bought by Markit in May 2004. [12]
The International Index Company (IIC) and CDS Index Company (CDSIndexCo), owners of the iTraxx and CDX credit default swap indexes, were acquired by Markit in November 2007. [13] [14]
In December 2007, Markit announced the acquisition of SwapsWire. [15]
The BOAT, Markets in Financial Instruments Directive-compliant trade reporting platform acquired by Markit from a consortium of nine investment banks In January 2008. The BOAT was owned by consortium of nine investment banks —ABN Amro, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, Merrill Lynch, Morgan Stanley and UBS who had launched the system in September 2006. [16] The Boat platform was established by these nine banks "for the collection and sale of trading data following the introduction of EU's Markets in Financial Instruments Directive (MiFID) in November 2007.
JPMorgan Chase's FCS Corporation, a provider of syndicated loan market portfolio and risk management software and services, including the Wall Street Office family of products, was acquired by Markit in July 2008. [17]
Fidelity Information Services's ClearPar, an electronic loan-trade-processing platform, was acquired by Markit in October 2009 which helped Markit to work with DTCC to improve the processing of syndicated loans. [18]
In 2013, Temasek Holdings bought 10% of shares for $500 million, thereby valuing the company at $5 bn. [19]
By 2012, the company had annual revenues of US$860 million, with over 3,000 employees and had a $5 billion valuation. [7] In 2013, different banks held 51% of Markit shares. 20% of shares were held by Markit employees and executives.
On 5 May 2014 Markit Ltd., a company registered in Bermuda, filed for an initial public offering (IPO), to be listed on the NASDAQ Global Select Market under the symbol MRKT. [2] [20] The stock began trading on 19 June 2014 with an initial pricing of $24 per share. [21]
On 12 July 2016, Markit and IHS Inc. merged in an all-stock merger of equals to form IHS Markit. [4]
On 17 January 2006 CDS IndexCo and Markit launched ABX.HE, a subprime mortgage backed credit derivative index, with plans to extend the index to underlying asset types other than home equity loans. [22]
On 19 January, 2006 it launched the Home Equity (ABX.HE) ABX. [23] [24] The following year in 2007 the loan credit default swap index (LCDX), a loan-only credit default swap index was created by CDS Index Company (CDSIndexCo). [25]
Sixteen financial institutions including: JPMorgan, Goldman Sachs, Deutsche Bank, Barclays Capital, Bank of America, BNP Paribas, Citigroup, Credit Suisse, Lehman Brothers, Merrill Lynch, RBS Greenwich, [26] UBS and Wachovia, [25] owned the private company called the CDS Index Company (CDS IndexCo), that developed the ABX index. By 2007 Markit marketed had acquired (CDS IndexCo). The ABX index was a credit default swap of asset-backed mortgages of 30 of the most liquid mortgage-backed bonds.
In 2013, Atlanta-based IntercontinentalExchange, a derivatives exchange and clearing house operator, announced four credit index futures contracts, based on the Markit CDX and Markit iTraxx indices—Markit CDX NA IG, Markit CDX NA HY, Markit iTraxx Europe (Main), and Markit iTraxx Crossover, would start in May 2013. [27] [ better source needed ]
Markit organized itself in three divisions: [2]
Division | Information | Processing | Solutions |
---|---|---|---|
Products and services |
|
|
|
revenue % (2013) | 48.5% | 28.0% | 23.5% |
In finance, a derivative is a contract that derives its value from the performance of an underlying entity. This underlying entity can be an asset, index, currency, or interest rate, and is often simply called the underlying. Derivatives can be used for a number of purposes, including insuring against price movements (hedging), increasing exposure to price movements for speculation, or getting access to otherwise hard-to-trade assets or markets.
In finance, a credit derivative refers to any one of "various instruments and techniques designed to separate and then transfer the credit risk" or the risk of an event of default of a corporate or sovereign borrower, transferring it to an entity other than the lender or debtholder.
In finance, a default option, credit default swaption or credit default option is an option to buy protection or sell protection as a credit default swap on a specific reference credit with a specific maturity. The option is usually European, exercisable only at one date in the future at a specific strike price defined as a coupon on the credit default swap.
A credit default swap (CDS) is a financial swap agreement that the seller of the CDS will compensate the buyer in the event of a debt default or other credit event. That is, the seller of the CDS insures the buyer against some reference asset defaulting. The buyer of the CDS makes a series of payments to the seller and, in exchange, may expect to receive a payoff if the asset defaults.
The International Swaps and Derivatives Association is a trade organization of participants in the market for over-the-counter derivatives.
The Depository Trust & Clearing Corporation (DTCC) is an American financial market infrastructure company that provides clearing, settlement and trade reporting services to financial market participants. It performs the exchange of securities on behalf of buyers and sellers and functions as a central securities depository by providing central custody of securities.
An asset-backed security (ABS) is a security whose income payments, and hence value, are derived from and collateralized by a specified pool of underlying assets.
Fixed-income arbitrage is a group of market-neutral-investment strategies that are designed to take advantage of differences in interest rates between varying fixed-income securities or contracts. Arbitrage in terms of investment strategy, involves buying securities on one market for immediate resale on another market in order to profit from a price discrepancy.
iTraxx is the brand name for the family of credit default swap index products covering regions of Europe, Australia, Japan and non-Japan Asia. Credit derivative indexes form a large sector of the overall credit derivative market. The indices are constructed on a set of rules with the overriding criterion being that of liquidity of the underlying credit default swaps (CDS).
A credit default swap index is a credit derivative used to hedge credit risk or to take a position on a basket of credit entities. Unlike a credit default swap, which is an over the counter credit derivative, a credit default swap index is a completely standardized credit security and may therefore be more liquid and trade at a smaller bid–offer spread. This means that it can be cheaper to hedge a portfolio of credit default swaps or bonds with a CDS index than it would be to buy many single name CDS to achieve a similar effect. Credit-default swap indexes are benchmarks for protecting investors owning bonds against default, and traders use them to speculate on changes in credit quality.
Intercontinental Exchange, Inc. (ICE) is an American multinational financial services company formed in 2000 that operates global financial exchanges and clearing houses and provides mortgage technology, data and listing services. Listed on the Fortune 500, S&P 500, and Russell 1000, the company owns exchanges for financial and commodity markets, and operates 12 regulated exchanges and marketplaces. This includes ICE futures exchanges in the United States, Canada, and Europe; the Liffe futures exchanges in Europe; the New York Stock Exchange; equity options exchanges; and OTC energy, credit, and equity markets.
An asset-backed securities index is a curated list of asset-backed security exposures that is used for performance bench-marking or trading.
A central clearing counterparty (CCP), also referred to as a central counterparty, is a financial market infrastructure organization that takes on counterparty credit risk between parties to a transaction and provides clearing and settlement services for trades in foreign exchange, securities, options, and derivative contracts. CCPs are highly regulated institutions that specialize in managing counterparty credit risk.
The loan credit default swap index (LCDX) is a loan-only credit default swap index created by CDS Index Company (CDSIndexCo). The LCDX index is a tradeable index with 100 equally weighted underlying single-name loan-only credit default swaps (LCDS).
A synthetic CDO is a variation of a CDO that generally uses credit default swaps and other derivatives to obtain its investment goals. As such, it is a complex derivative financial security sometimes described as a bet on the performance of other mortgage products, rather than a real mortgage security. The value and payment stream of a synthetic CDO is derived not from cash assets, like mortgages or credit card payments – as in the case of a regular or "cash" CDO—but from premiums paying for credit default swap "insurance" on the possibility of default of some defined set of "reference" securities—based on cash assets. The insurance-buying "counterparties" may own the "reference" securities and be managing the risk of their default, or may be speculators who've calculated that the securities will default.
IHS Markit Ltd was an information services provider that completed a merger with S&P Global in 2022. Headquartered in London, it was formed in 2016 with the merger of IHS Inc. and Markit Ltd.
This article provides background information regarding the subprime mortgage crisis. It discusses subprime lending, foreclosures, risk types, and mechanisms through which various entities involved were affected by the crisis.
iBoxx is a financial services division of IHS Markit that designs, calculates and distributes fixed income indices. iBoxx is overseen by IHS Markit Benchmark Administration Limited, which is regulated by the Financial Conduct Authority and is an authorized benchmark administrator under the UK Benchmarks Regulation. IMBA UK's benchmark administration activities have been conducted in compliance with the IOSCO Principles for Benchmarks since 2014.
In April and May 2012, large trading losses occurred at JPMorgan's Chief Investment Office, based on transactions booked through its London branch. The unit was run by Chief Investment Officer Ina Drew, who later stepped down. A series of derivative transactions involving credit default swaps (CDS) were entered, reportedly as part of the bank's "hedging" strategy. Trader Bruno Iksil, nicknamed the London Whale, accumulated outsized CDS positions in the market. An estimated trading loss of $2 billion was announced. However, the loss amounted to more than $6 billion for JPMorgan Chase.
A bespoke portfolio is a table of reference securities. A bespoke portfolio may serve as the reference portfolio for a synthetic CDO arranged by an investment bank and selected by a particular investor or for that investor by an investment manager.
Some top banks are quietly indexing credit, avoiding the credit bubble and raking in big bucks.