Markit

Markit Ltd. was a British financial information and services company with over 4,000 employees,[3] founded in 2003 as an independent source of credit derivative pricing.[4] The company provides independent data, trade processing of derivatives, foreign exchange and loans, customised technology platforms and managed services. The company aims to enhance transparency, reduce financial risk and improve operational efficiency. Its client base includes institutional participants in the financial marketplace.[3] On 12 July 2016, Markit and IHS Inc. merged in an all-stock merger of equals to form IHS Markit.[5][6]

For other uses, see Markit (disambiguation).

Markit Ltd.
TypePublic
NASDAQ: MRKT
IndustryFinancial services
Fatein 2016 merged with IHS Inc. to form IHS Markit
SuccessorIHS Markit
Founded2003
Defunct12 July 2016
HeadquartersLondon, United Kingdom
Number of locations
21 offices
Area served
Worldwide
Key people
Jerre Stead (CEO IHS Markit) & Lance Uggla (President IHS Markit)[1]
ProductsFinancial information
Financial processing
Financial services
Financial solutions
Market data vendor
Revenue US$ $1.5 billion [2]
Number of employees
4,500 (October 2015)
DivisionsInformation
Processing
Solutions
Websitewww.markit.com

Background

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]

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][12] The stock began trading on 19 June 2014 with an initial pricing of $24 per share.[13]

Company performance

By 2009 Markit had "1,000 institutions as clients - including investment banks, hedge funds, asset managers, central banks, regulators, rating agencies, and insurance companies."[4]

In 2012, the company had annual revenues of US$860 million, with 3000 employees. In 2012, Markit had a $5 billion valuation.[7]

By 2013 Markit served 3,000 institutions across the financial markets which include investment banks, hedge funds, asset managers, central banks, regulators, auditors, fund administrators and insurance companies.[3]

Acquisitions

Totem Valuations, a supplier of consensus valuations and month-end data, was bought by Markit in May 2004[14]

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[15]

SwapsWire's acquisition by Markit announced In December 2007.,[16]

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.(Finextra 2008)[17] 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.[18]

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.[19]

Index products

On 17 January 2006 CDS IndexCo and Markit launched ABX.HE, a subprime mortgage backed credit derivative index, with planned to extend the index to underlying asset types other than home equity loans.[20][21] In a marketing presentation(2006 & Wiley) CDS IndexCo was described as the owner of the DJ CDX family of credit default swap (CDS) indices formed from a merger of the major CDS indices (iBoxx and Trac-X) in April 2004. It introduced a "second generation product such as index tranches and index options."(Wiley 2006)[22] They launched the Home Equity (ABX.HE) ABX on 19 January 2006. Others, such as Credit Cards (ABX.CC), Student Loans (ABX.SL), Auto Loans (ABX.AU) were to be announced in the future. Advertised daily prices were available on the Markit website. The purpose of the indices is to allow investors to trade exposures to the subprime market without holding the actual asset backed securities. The ABX.HE Index was created from "qualifying deals of 20 of the largest sub-prime home equity ABS shelf programs from the six month period preceding the roll."(Wiley 2006, p. 11) The market makers of ABX.HE were listed JPMorgan, Goldman Sachs, Deutsche Bank, Barclays Capital, Bank of America, BNP Paribas, Citigroup, Credit Suisse, Lehman Brothers, Merrill Lynch, RBS Greenwich,[23] UBS and Wachovia.(Wiley 2006, p. 13)

The Loan credit default swap index (LCDX), a loan-only credit default swap index was created in 2007 by CDS Index Company (CDSIndexCo).[24] Forbes journalist described the creation of the index as just-in-time financial engineering. The LCDX provided protection for banks and hedge fund clients from the overly leveraged loan market. (2007 & Lenzer)[24]

Sixteen major financial institutions, JPMorgan, Goldman Sachs, Deutsche Bank, Barclays Capital, Bank of America, BNP Paribas, Citigroup, Credit Suisse, Lehman Brothers, Merrill Lynch, RBS Greenwich,[23] UBS and Wachovia,[24] owned the private company called the CDS Index Company (CDS IndexCo), that developed the ABX index on 17 January 2006. Markit Group Limited marketed the ABX index and by 2007 had acquired (CDS IndexCo). On 17 The ABX index was a credit default swap of asset-backed mortgages of 30 of the most liquid mortgage-backed bonds. Hedge funds began shorting that ABX index in early 2006 at par. The Deutsche Bank, alone, reportedly made $250 million. (2007 & Lenzer)[24]

Atlanta-based IntercontinentalExchange (NYSE: ICE), 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. The contracts were subject to review by the Commodity Futures Trading Commission.[25]

Management and employees

Markit had 150 employees in 2003, and by the end of 2013 had around 3200 employees across the Globe.[8]

Management per June 2016:[2]

NameFunction
Lance Ugglafounder and Chief Executive Officer
Kevin Gouldco-founder and President
Jeff GoochChief Financial Officer
Adam KanslerChief Administrative Officer
Shane AkeroydGlobal Head of Sales
Stephen WolfHead of Group Corporate Strategy
Sarah Bateman Head of Human Resources
Rob Flatley Head of Equities
Roy Flint Chief Technology Officer
Brad Levy Head of Processing
Ranjit Moses Chief Marketing Officer
Chris Williamson[26]Chief economist
Sari Granat General Counsel
Michele Trogni
Yaacov Mutnikas		 Cohead of Solutions
Chip Carver
Adam Kansler		 Cohead of Information

Shareholders

In 2013, different banks held 51% of Markit shares.
20% of shares is held by Markit employees and executives.
As of October 2013, General Atlantic is the biggest independent shareholder with 11% of shares.[27] General Atlantic's CEO William E. Ford serves on the board of directors.[28]
Temasek Holdings bought 10% of shares in 2013 for $500 million, thereby valuing the company at $5 bn.[29]

ShareHolders (2013)% Share[27]
RBS3.4
Goldman Sachs5.3
JP Morgan7.9
Bank of America8
Temasek10
General Atlantic11
Employees20

Divisions, products and services

Markit organizes itself in three divisions:[2][3]

DivisionInformationProcessingSolutions
Products and services
  • Valuation and Trading Services
    • Portfolio Valuations
    • Totem
  • Pricing and Reference Data
    • major asset classes
    • Reference Entity Database (“RED”)
    • Bond Reference Data
  • Indices
    • PMI series, iBoxx, iTraxx, CDX and iRxx.EM.[30]
  • MarkitSERV: derivatives
  • MarkitClear: loans
  • Enterprise Software
    • Enterprise Data Management (EDM)
    • Analytics
    • Wall Street Office (WSO)
  • Managed Services
    • Markit On Demand (MOD)
    • Counterparty Manager
revenue % (2013)

48.5%

28.0%

23.5%

References
  1. "IHS Markit - About Us". ihsmarkit.com.
  2. "Final Prospectus". SEC. 20 June 2014. Retrieved 24 June 2014.
  3. "About Markit". Markit. Retrieved 13 December 2013.
  4. Markit USD Interest Rate Curve XML Specification (PDF) (Report). Markit. 30 March 2009.
  5. "IHS and Markit to Merge, Creating a Global Leader in Critical Information, Analytics and Solutions". BusinessWire. 21 March 2016.
  6. "IHS Markit Rings Opening Bell at Nasdaq, Unveils New Logo - IHS Online Newsroom". press.ihs.com.
  7. "Plumbers in suits". The Economist. 6 July 2013.
  8. Companies House information
  9. Harrison, Natalie (14 November 2007). "Markit says buys IIC, agrees to buy CDS IndexCo". Reuters. Retrieved 14 December 2007.
  10. Baird, Jane (23 November 2007). "Global investors struggle to value credit assets". Financial Post. Archived from the original on 6 December 2007. Retrieved 16 December 2007.
  11. "Markit and DTCC launch OTC derivatives trade processing JV". FinExtra.com. 1 September 2009. Retrieved 30 October 2009.
  12. Alden, William (5 May 2014). "Financial Data Company Markit Files for I.P.O." The New York Times. Retrieved 5 May 2014.
  13. "Markit IPO jumps after selling shares". USA Today. 19 June 2014.
  14. "Mark-It Partners acquires Totem Valuations". Finextra. 5 May 2004. Retrieved 10 October 2010.
  15. "Markit Buying Owners of iTraxx, CDX Credit Indexes". Bloomberg. 14 November 2007. Retrieved 14 December 2007.
  16. "Markit to buy SwapsWire". Finextra.com. 4 December 2007. Retrieved 14 December 2007.
  17. Finextra (22 January 2008). "Markit buys Boat". Finextra Research. Retrieved 4 February 2008.
  18. Dave Valiante (28 July 2008). "JPMorgan's FCS Corporation Acquired By Markit". Wall Street & Technology. Archived from the original on 18 July 2011. Retrieved 21 September 2008.
  19. Michael Aneiro (30 October 2009). "Markit To Acquire Electronic Loan-Trading Platform ClearPar". The Wall Street Journal. Retrieved 30 October 2009.
  20. "CDS Indexco and Markit Launch Synthetic ABS Index". Markit. 17 January 2006. Retrieved 14 December 2007.
  21. "Markit launched ABX.HE". 17 January 2006.
  22. "ABX Indices The New US Asset Backed Credit Default Swap Benchmark Indices" (PDF). Wiley. January 2006.
  23. "RBSGC". www.rbsgc.com. Archived from the original on 22 April 2009. Retrieved 30 January 2020.
  24. Lenzner, Robert (8 August 2007). "Profiting From The Meltdown". Forbes. Some top banks are quietly indexing credit, avoiding the credit bubble and raking in big bucks.
  25. "IntercontinentalExchange (ICE) announced the launch of credit index futures contracts". Press Release Newswire. New York: IntercontinentalExchange (ICE). 11 March 2013. Missing or empty |url= (help)
  26. Bishop, Katrina (2 January 2015). "Euro zone manufacturing 'near-stagnant' in December". CNBC.com. NBCUniversal.
  27. "Banks cut holdings in Markit". eFinancialNews. 16 October 2013.
  28. "General Atlantic Takes Minority Stake in Markit". General Atlantic website. Archived from the original on 22 January 2016. Retrieved 4 November 2015.
  29. "Temasek stake in Markit values data company at $5bn". Financial Times. 21 May 2013.
  30. "iRxx". www.markit.com.
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