CME Group, a derivatives marketplace and IHS Markit have agreed to form a joint venture (JV) to provide post-trade services for over-the-counter (OTC) markets.
The two companies will combine their post-trade services into the 50/50 JV and provide trade processing and risk mitigation operations, incorporating CME’s businesses Traiana, TriOptima and Reset and IHS Markit’s MarkitSERV.
The combination of the offerings is expected to offer clients with enhanced platforms and services for global OTC markets across interest rate, FX, equity and credit asset classes.
The offerings are anticipated to provide enhanced connectivity and improved trading certainty, allowing OTC market participants to benefit from an efficient front-to-back workflow.
With the post-trade services joint venture, CME Group and IHS Markit are expected to enable OTC market participants to improve risk management and streamline post-trade operations.
CME Group chairman and CEO Terry Duffy said: “As OTC derivatives markets become increasingly fragmented, market participants are seeking to more effectively manage their risk and optimize their balance sheets.
“By combining the strengths of these diverse businesses into one organization, the joint venture will be better positioned to serve clients worldwide by driving innovation, developing valuable products and providing operational efficiencies.”
CME’s Traiana, TriOptima and Reset are claimed to offer a wide range of pre- and post-trade services with capital efficiencies across markets. The businesses deliver trade processing connectivity, credit controls, optimisation and solutions to mitigate risks.
IHS Markit’s MarkitSERV offers an end-to-end trade processing and workflow solutions to support market participants across the derivatives and foreign exchange (FX) markets. The services range from post-trade notices of execution, trade confirmation and allocations to clearing and reporting.
IHS Markit chairman and CEO Lance Uggla said: “As the trade processing ecosystem continues to evolve, we believe there is an opportunity to reduce operational complexity and deliver additional value to customers.
“Through our combined resources and best-of-breed services, we will have a strengthened framework to serve dynamic global markets and design new solutions in partnership with our joint customer base.”
Subject to customary antitrust and regulatory approvals, the transaction is expected to close in the summer of this year.
At the closing, IHS Markit has agreed to pay $113m to CME for the JV’s 50% stake. The two companies did not disclose any further financial terms.
