Subject: File No. 265-26
From: Kapil Khetan, CFA, FRM
Affiliation: Adjunct Professor, New York University

December 12, 2010

The need for reducing risk and increasing transparency in the credit derivatives market cannot be overstated. Today's article in the NY Times touches upon it. Details at

Full disclosure: I was the Global Head for Analytics and Operations at Markit 2008-2009.

I urge you to think about my comments and determine for yourself the importance of making public the credit index composition, fixing and trading. Full letter below:

Dear Sir

The clearinghouse monopoly is a smoke-screen. They are actually doing a good job there. The writer fails to identify the jewel in the crown owned by Markit (which is really a front for the banks) - the indices (CDX and iTraxx). Imagine the equity markets if the banks owned the SP indices and you had to trade through them since they wont license it. THAT is exactly what has happened with the indices. We need the government to step in and say that the creation of the indices and the trading of them HAS to be obtainable at a cost+ charge. The CME and CBOE will create liquidity and transparency that will warm the hearts of every risk manager. Simple as that. No one is really interested in trading credits spreads in all 3000 issuers in 5 currencies for 10 tenors with more than one document clause. Just get the indices in the public domain and the financial world will be a better place. It is an imperative that the lobbyists will fight for sure.


Kapil Khetan, CFA, FRM

P.S. Full disclosure - I was the global head for analytics and operations for CDS at Markit in 2008-2009