Derivatives marketplace CME Group, and IHS Markit, a specialist in critical information, analytics and solutions, are to combine their post-trade services into a new joint venture. The new company will include trade processing and risk mitigation operations. It will incorporate CME Group’s optimisation businesses – Traiana, TriOptima, and Reset – and IHS Markit’s MarkitSERV.
The combination of these complementary offerings will provide clients with enhanced platforms and services for global OTC markets across interest rate, FX, equity and credit asset classes. Market participants will benefit from a more efficient front-to-back workflow with enhanced connectivity and improved trading certainty. As a result, OTC market participants will be able to improve risk management and streamline post-trade operations.
“As OTC derivatives markets become increasingly fragmented, market participants are seeking to more effectively manage their risk and optimise their balance sheets,” says Terry Duffy, CME Group Chairman and Chief Executive Officer. “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.”
“As the trade processing ecosystem continues to evolve, we believe there is an opportunity to reduce operational complexity and deliver additional value to customers,” says Lance Uggla, IHS Markit Chairman and Chief Executive Officer. “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.”
Traiana, TriOptima and Reset offer a wide range of pre- and post-trade services with capital efficiencies across markets, delivering trade processing connectivity, credit controls, optimisation and risk mitigation solutions.
MarkitSERV provides end-to-end trade processing and workflow solutions that support all participants across the derivatives and FX markets, from post-trade notices of execution, trade confirmation and allocations to clearing and reporting.
The transaction is expected to close in summer 2021 subject to customary antitrust and regulatory approvals and other customary closing conditions.
At closing, IHS Markit will make an equalisation payment of USD113 million to CME Group to achieve 50/50 ownership and shared control in the joint venture. Further financial terms have not been disclosed.