CME Group and IHS Markit to Form Leading Post-Trade Services Joint Venture for OTC Markets

Rhea-AI Summary

CME Group and IHS Markit have announced a joint venture combining their post-trade services, enhancing trade processing and risk mitigation operations. The new entity will integrate CME's Traiana, TriOptima, and Reset with IHS Markit's MarkitSERV, streamlining operations for global OTC markets across various asset classes. The transaction is set to close in summer 2021, pending regulatory approvals, with an equalization payment of $113 million from IHS Markit to achieve shared control of the venture.

Positive

• Creation of a joint venture combining post-trade services enhances market offerings.
• Integration of complementary services provides better risk management and operational efficiencies.
• Expected to streamline operations for OTC markets, leading to improved trading certainty.

Negative

• None.

CME Group (NASDAQ: CME), the world's leading and most diverse derivatives marketplace, and IHS Markit (NYSE: INFO), a world leader in critical information, analytics and solutions, today announced that they have agreed 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 optimization 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 optimize their balance sheets,” said 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,” said 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, optimization 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 equalization payment of $113 million to CME Group to achieve 50/50 ownership and shared control in the joint venture. Further financial terms were not disclosed.

About CME Group

As the world's leading and most diverse derivatives marketplace, CME Group (www.cmegroup.com) enables clients to trade futures, options, cash and OTC markets, optimize portfolios, and analyze data – empowering market participants worldwide to efficiently manage risk and capture opportunities. CME Group exchanges offer the widest range of global benchmark products across all major asset classes based on interest rates, equity indexes, foreign exchange, energy, agricultural products and metals. The company offers futures and options on futures trading through the CME Globex® platform, fixed income trading via BrokerTec and foreign exchange trading on the EBS platform. In addition, it operates one of the world's leading central counterparty clearing providers, CME Clearing. With a range of pre- and post-trade products and services underpinning the entire lifecycle of a trade, CME Group also offers optimization and reconciliation services through TriOptima, and trade processing services through Traiana.

CME Group, the Globe logo, CME, Chicago Mercantile Exchange, Globex, and, E-mini are trademarks of Chicago Mercantile Exchange Inc. CBOT and Chicago Board of Trade are trademarks of Board of Trade of the City of Chicago, Inc. NYMEX, New York Mercantile Exchange and ClearPort are trademarks of New York Mercantile Exchange, Inc. COMEX is a trademark of Commodity Exchange, Inc. BrokerTec, EBS, TriOptima, and Traiana are trademarks of BrokerTec Europe LTD, EBS Group LTD, TriOptima AB, and Traiana, Inc., respectively. Dow Jones, Dow Jones Industrial Average, S&P 500 and S&P are service and/or trademarks of Dow Jones Trademark Holdings LLC, Standard & Poor's Financial Services LLC and S&P/Dow Jones Indices LLC, as the case may be, and have been licensed for use by Chicago Mercantile Exchange Inc. All other trademarks are the property of their respective owners.

About IHS Markit (www.ihsmarkit.com)

IHS Markit (NYSE: INFO) is a world leader in critical information, analytics and solutions for the major industries and markets that drive economies worldwide. The company delivers next-generation information, analytics and solutions to customers in business, finance and government, improving their operational efficiency and providing deep insights that lead to well-informed, confident decisions. IHS Markit has more than 50,000 business and government customers, including 80 percent of the Fortune Global 500 and the world’s leading financial institutions. Headquartered in London, IHS Markit is committed to sustainable, profitable growth.

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View source version on businesswire.com: https://www.businesswire.com/news/home/20210112005575/en/

FAQ

What is the joint venture between CME Group and IHS Markit about?

The joint venture aims to combine their post-trade services, including trade processing and risk mitigation.

When is the transaction between CME Group and IHS Markit expected to close?

The transaction is expected to close in summer 2021, pending regulatory approvals.

What payment will IHS Markit make to CME Group as part of the joint venture?

IHS Markit will make an equalization payment of $113 million to achieve 50/50 ownership.

What services will the new company provide?

The new venture will enhance platforms for global OTC markets across interest rate, FX, equity, and credit asset classes.

How will the joint venture affect market participants?

The joint venture aims to improve risk management and streamline post-trade operations for market participants.