Deutsche Bank, Goldman Sachs and JPMorgan Finalise Agreement to Sell Credit Derivatives Reference Entity
Market leaders take equity stake in Mark-it Partners
JPMorgan joins Deutsche, Goldman in contributing CDS and other credit prices
Deutsche Bank, Goldman Sachs and JPMorgan announced today that they have executed an agreement to sell their combined Reference Entity Database ("RED") to Mark-it Partners. At the same time, the firms announced they are taking an equity stake in the company. Terms were not disclosed.
In addition, JPMorgan has entered into a data services agreement with Mark-it Partners under which it will contribute credit default swap prices as well as certain prices for credit cash instruments. Deutsche Bank and Goldman Sachs signed data services agreements with Mark-it Partners in December 2002.
Created to drive growth in the credit derivatives market by enhancing liquidity and transparency, RED will, by year end, enable market participants to precisely match approximately 2,000 reference entities in Europe, the U.S. and Asia with their associated benchmark bonds, or reference obligations. The greater certainty in matching reference entities and reference obligations will expedite confirmations.
"The founding partners of Project RED have done considerable legwork to establish an essential tool that benefits the entire credit derivatives market," said Mel Gunewardena, managing director at Goldman Sachs. "Given the rapid growth of the database, we felt it was time to pass the torch to a trusted third party for whom growing and maintaining RED would be a core business. We have great confidence in Mark-it Partners' ability to attract other major market players to use, contribute to and establish RED as the definitive source of reference entity information for credit derivatives."
"The announcements today represent the next steps in the continued expansion and development of credit derivatives as an asset class," said Andrew Palmer, managing director and head of Global Structured Products Marketing for JPMorgan. "By providing a scrubbed reference entity database, Mark-it Partners is enabling market participants to trade more efficiently and with clarity and certainty. In addition, as a market leader, JPMorgan's provision of expanded pricing data will promote transparency for everyone's benefit."
Lance Uggla, CEO Mark-it Partners said "We are delighted that Deutsche Bank, Goldman Sachs and JPMorgan have taken an equity position as it validates our core strategy and the progress we have made over the last year. We look forward to working with them and to developing RED into the market standard."