Article: Markit and Traiana? Is there room for both?

05 April 2013 | Maria Leontiou

As SEF rules will come into force later this year, CreditLink by Traiana and Credit Centre by MarkitSERV, both prepare themselves for launch even though both concede there may only be room for one, and dealers have been pressing for a single hub.  One more link in the central clearing chain is the need to ensure that an executed trade won't be rejected by a CCP due to a breach of either the client's credit limit with its FCM/CB or the clearing member's limit with the CCP. Both hubs intend to do that pre-trade credit check and help market participants avoid unnecessary breaks. Investment Europe hosts an interesting article quoting both sides. Maria L


Can anyone articulate how the equivalent process works in the futures world (and would therefore one presumes apply to swapfutures)? I have heard that the client's futures agency execution broker (which may or may not be the client's clearing broker) takes the risk of clearing being declined.Perhaps there is an opportunity for FCM's to play a similar agency execution broker role in the SEF world and remove the need for the industry wide credit checking utilities altogether?

Reblogged this on Carl A R Weir's Blog.

Absolutely there is.I had to scorecard MarkitServe, Traiana, and UnaVista.Bottomline Traiana do not do OTC derivatives, F&O, Fixed Income and listed derivatives very well at all. markitServe do.UnaVista has a lot to do to catch up at all, so,there clearing SDR utility is a focus for something else, likemtheirmLSEG business.

As the article puts it, at its last paragraph, the hub approach is one of the options being considered.in other variants, credit checks would be performed by SEFs, FCMs, CCPs or a combination of the three, so this option is not final yet....

Yes. I suppose my point was really that the same problem exists for swapfutures without the same solution and may therefore fall on futures brokers not yet equipped to manage the swap counterparty risk underlying swapfutures...