Markit Releases Annual Scorecard

London, 12th January 2006 - Markit Group Limited ("Markit"), the leading industry source of independent mark-to-market pricing and valuations, today released the results of its annual Scorecard which reviews market volumes, dealer and client operational models, technology, product control and risk management in the credit derivatives industry. The Scorecard, which is produced in partnership with Reoch Consulting Limited, collates data provided by the leading dealers. 23 firms participated in this year's Scorecard.

Trade Volumes

The 2005 Scorecard shows that the average number of credit default swap trades executed per month has increased by 89% over the last year. There has also been a marked increase in the volume of credit index trades transacted, with one index trade done for every three single name trades compared to a ratio of one in every eight in 2004.

Operational Infrastructure

The section of the Scorecard under most scrutiny this year is the operations summary. The dealers have been under pressure from the Financial Services Authority (FSA) and the Federal Reserve Board (Fed) to improve practices in credit derivatives processing since early 2005.

The Scorecard highlights the significant improvements made in operational infrastructure. The key highlights are:

• Nearly three quarters of trades are now covered by International Swaps and Derivatives Association (ISDA) Master Confirmation Agreements, up from 50% a year ago
• 100% of top tier firms use the Depository Trust & Clearing Corporation (DTCC) for trade matching, and this figure is 80% across Tier 1, 2 and 3 firms, up from 60% in 2004
• Technology investment in operations is up by 32%
• There has been significant investment in skilled resources, with the average headcount in credit operations at the major dealers increasing by almost 25% over the last year

Outstanding Confirmations

Mismatches in reference entity names are no longer a factor in matching and confirmation, following the widespread adoption of Markit RED. However, the Scorecard still shows a high level of confirmable amendments, which does impact the level of outstanding confirmations. Respondents are addressing this through sizeable investment in trade capture systems and more widespread use of the Markit RED Preferred Reference Obligations list.

Another interesting finding was that the May 2005 market correction had a considerable impact on models, product control procedures and reserves. 32% of respondents, for example, amended their CDO models after the May events in the correlation markets.

Penny Davenport, Director of Markit said: "The Markit Scorecard has become an industry benchmark, and is just one strand of our commitment to transparency in the financial markets. We have been pleased to sponsor this initiative for a number of years now, and the value of the benchmarking has been underlined by the monthly collection of key dealer metrics for the Fed."

Jonathan Davies, Partner at Reoch Consulting added: "The latest Scorecard shows that participants in this market are addressing the processing and technology impediments that came to light in 2004. Furthermore, the industry as a whole continues to work together to build an infrastructure which is robust and can become a core component of the global financial markets."

- Ends -

For further information, please contact:

Markit
Teresa Chick
Marketing and Communications Manager
Tel: +44 (0)20 7890 5094
Email: teresa.chick@markit.com

Reoch Consulting
Jonathan Davies
Partner
Tel: +44 (0)20 7038 1680
Email: jonathan.davies@creditderivatives.com

About Markit

Markit is the benchmark industry source of independent pricing and valuations for the global financial and energy markets. Markit has data contributed by over 50 dealing firms, and its services are used by 400 institutions globally. Areas of product expertise include OTC derivatives (credit, equity, FX, rates, inflation, energy, power, metals and structured products), corporate bonds, syndicated loans, dividend forecasting, and index and ETF management. Markit has most recently brought price transparency to the European asset-backed securities market with the launch of the first independent ABS pricing service. Markit's position in the derivative markets was acknowledged by the industry in 2005, with awards from IFR for Innovation of the Year (Credit Event Fixings); Financial News for Best Derivatives Data Provider; and Institutional Investor's Operations Management for Vendor of the Year (RED). For more information about Markit, see www.markit.com

About Reoch Consulting

Reoch Consulting is a London based consultancy focusing on credit derivatives, asset backed securities, bonds and traditional bank credit products. The business is organised into the following business units:

- Infrastructure
- Derivative operations resource and support
- Quantitative Credit Solutions
- Training

Reoch Consulting brings together a unique four person executive team that includes leading experts in infrastructure, trading, systems and quantitative finance to address the current issues being faced by market practitioners. In addition to the executive team Reoch Consulting has thirty full time employees. For more information about Reoch Consulting, see www.reochconsulting.com