By Rachel Morarjee
September 27 2007
SourceThe level of transparency in the global credit derivatives market is set to rise following a deal between Reuters and Markit Group, a third-party data provider.
The deal will offer intra-day pricing of credit default swaps to the estimated 100,000 regular users of Reuters terminals for the first time, giving this information to a much broader pool of investors than before.
The credit derivatives market has recently enjoyed a startling pace of growth, but the expansion has provoked unease because the sector has traditionally been relatively opaque, making it hard for investors to track prices in a timely manner.
Markit has been gathering data on the over-the-counter credit derivatives market for some time, and disseminating it to clients.
The deal means a wider pool of investors can see regular prices on instruments such as credit default swaps, which provide a kind of insurance against non-payment of corporate debt.
“The CDS market to a great extent is driving other markets, in particular equities,” said Andrew Hausman, Global Head of Fixed Income at Reuters. “Stock prices are moving on credit default prices.”
Copyright The Financial Times Limited 2007