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Markit Scorecard™
Credit Derivative Industry Survey
The Markit Scorecard™ is a tool to help users of credit derivatives implement best practice.
Every year, Markit conducts a survey of operational issues within the credit derivatives industry and uses the results to identify what constitutes best practice. Using its unique calculator, Markit scores institutions' credit derivatives infrastructure to assess whether these institutions are ahead or behind their peers. This process highlights areas of operational risk and help institutions devise techniques to mitigate their risks.
Market Benefits
- Improving the operating environment at all participating firms and reducing operational risk in the business
- Addressing industry issues to promote transparency and standardisation
- Educating stakeholders in the market such as regulators, fiscal authorities, end investors and senior management
Business Model & The Market
- Market challenges this year
- Volume analysis by region & product type
- Level of integration of credit trading activities
- Front office staff allocations per product type
- Sales force organisation
Operations
- Confirmations versus trade volume
- Auto-matching and DTCC validation
- Staff ratios such as Front Office to Back Office
- Degree of automation & ref. entity scrubbing
- Monitoring of credit events
- Payment and settlement accuracy
Risk Management
- Types of limits used to assess risk
- Calculation methodology used
- Reporting risk by period, sector & region
- Use of regulatory or economic capital models
- Pricing sources used, interpolation & extrapolation
Technology
- Technology spending and projections
- Dedicated technology resources
- Product types supported by tech staff
- Ratios such as volume, front office & revenue
Product Control
- Frequency & method of checking curves
- Percentage covered of the portfolio
- Time to report IPV procedures
- Valuation of complex trades
- Pricing sources used, interpolation & extrapolation
