Leading Banks Join New Credit Pricing Service

Article excerpt

Byline: Piers Townsend

Eleven leading fixed income houses have joined Mark-it, which claims to be the world's first daily pricing data service for credit derivatives and cash credit instruments.Mark-it Partners, run by ex-TD Securities manager Lance Uggla, is launching the system with the support of several contributing partners who will provide pricing data. They are ABN Amro, Bank of America, Schroder Salomon Smith Barney, Credit Suisse First Boston, Deutsche Bank, Dresdner Kleinwort Wasserstein, Goldman Sachs, Lehman Brothers, Merrill Lynch, Morgan Stanley and TD Securities.

Mark-it - the name is derived from the term 'mark-to-market' - was funded through a mixture of private equity from the management team and partnership funding. The contributors will have the option to take stock in the company to a total of 67%, or 5% to 6% per institution.

The system will be delivered via a website and targeted at credit investors ranging from banks and credit funds to insurers, re-insurers and asset managers trying to build credit portfolios.

Uggla said: "The credit markets have grown exponentially over the past few years, yet recent record bond defaults and corporate collapses have increased pressure to obtain up-to-date, high quality market data.

"At present, most credit market participants are struggling to achieve daily price verification on all but the most liquid of assets and this is hindering the growth of the market." He concluded: "This should increase transparency around credit pricing, which in turn should increase liquidity. That is an attractive proposition for our partners."

One of the system's best attributes is the linking of cash bonds and their associated derivatives on one pricing page. This includes the notoriously opaque credit default swap market, in which counterparties buy and sell protection against companies defaulting on their debt. …