Dear Friends, Buy-Side Firms, Bank Clients and Shareholders,
Today, trueEX has taken the extraordinary step of seeking the protection from the United States District Court for the Southern District of New York in order to preserve our interests as well as those of our buy-side and bank clients in the derivatives market.
trueEX has created a state-of-the-art infrastructure from the ground up, which allows market participants to directly transmit transaction information to clearing houses, SDRs, gateways and other destinations. When parties execute a transaction on trueEX, we provide the execution, matching, direct clearing, direct reporting as well as STP “drop copy” connectivity to the “middleware” provider MarkitSERV (“Markit”). We do all of the above processing from execution to clearing and reporting across 20 currencies typically in under 1 second; as opposed to legacy workflows where the process can typically take 10 minutes to hours, and incur significantly higher direct and indirect costs and increased operational risks.
trueEX’s innovation and infrastructure have allowed market participants to enjoy seamless processing from execution to the clearing houses and SDRs along with the ability to send trade information to Markit. Despite operating in this manner for several years, Markit recently informed us Markit is no longer willing to accept a “drop copy” only message, if it originates from trueEX.
We believe this action is unilateral and only being applied to trueEX.
While we believe we know why Markit is taking this action, we encourage you to ask this very question directly to your Markit contacts.
What I have surmised from my conversations with Markit, is they would like us to interact with them in a manner that most closely resembles the way voice broker IDB firms interact with them for voice trades - meaning the transaction would be executed on trueEX (FIX or UI) and then Markit exclusively would perform the matching, clearing and SDR messaging life cycle events.
This change requires trueEX to insert Markit in the “middle” of all of our activities in order to process, clear and report transactions, thereby creating additional workflow steps, potentially slower response times, additional software and connectivity changes and higher costs.
Over the past several days, many of you have asked how you can assist us. The most direct way is to convince Markit to withdraw and rescind its termination of its Markit services and allow us to operate in the most efficient manner from the perspective of buy-side and bank clients.
Thank you very much for your continued support and your engagement on this important and urgent matter. We will keep you apprised of our developments and I am available to speak or meet with you to answer your questions.