About a-team Marketing Services
The knowledge platform for the financial technology industry
The knowledge platform for the financial technology industry

A-Team Insight Blogs

CQS Win is Representative of OTC Val’s Post-Acquisition Appeal, Says Tullett’s Humphrey

Subscribe to our newsletter

Following its acquisition of specialist derivatives valuation vendor OTC Val earlier this year, Tullett Prebon has bagged its first public client win in the form of hedge fund CQS. According to Paul Humphrey, CEO of Tullett Prebon’s Electronic Broking and Information division, this win is representative of the increased customer appeal of the OTC Val offering now that it is securely ensconced in the interdealer brokerage firm’s portfolio.

“One of the things we noticed when selling valuations into risk departments is that OTC Val was being held back by its size when it was based in Vancouver. The departments look at all types of risk during due diligence and one of the risks when considering a small vendor is that it may not be around for the long term. Clearly that went away once they became part of the Tullett Prebon Group and that is something that you can see in the CQS deal. They probably wouldn’t have signed with us before the acquisition, which gave the firm stability being part of the Tullett family. We have seen that with other customers and that OTC Val now has access to a more extensive suite of information,” explains Humphrey.

As he noted when speaking to Reference Data Review back in April, the addition of Tullett’s London and New York presence to OTC Val’s geographic reach has also bolstered its chances in the booming valuations sector. “OTC Val was based in Vancouver when we acquired the company and now we have established sales offices in London and New York. We have moved Miroslav from Vancouver to London and Bob Sangha to the New York office to head up the sales operations. We have also recently hired more sales people for the valuations space in both centres, so the integration work involved in establishing those presences has been completed,” says Humphrey.

Moreover, OTC Val now also has full access to all the information produced by the firm’s Information business, including access to information from its brokerage business that is too sensitive to sell. Humphrey contends that this means that for the purposes of valuation it has very acute information. “Some of our information customers that have asked us for data sets that are too sensitive for us to sell them on an information basis, have come to us for valuations services instead because they know we have that detailed information internally,” he explains.

Since the acquisition, the valuations vendor has seen a definite uptick in customer interest and Humphrey notes a “healthy pipeline of inquiry coming through”, which he reckons will convert to sales in the near future. The time it takes to convert a customer is similar to that of its Information business, so companies will trial the solution and see if they like its methodology before discussions begin again, he explains. “There is always a bit of a time lag but at the moment we have a number of customers that have signed non-disclosure agreements (NDAs) with us and our testing our service. We are confident that we will be able to deliver to these customers.”

Humphrey’s London-based colleague and head of EMEA for OTC Val Miroslav Vanous reckons the acquisition has also meant a new type of customer is in the frame. “The types of clients we have seen interested in the service post-acquisition are much larger than before. There has been a substantial increase in the deal sizes we are seeing. There continues to be interest from the fund admin space, investment management arms of banks and asset managers,” he elaborates.

Vanous believes CQS is a textbook case win for the vendor as it is a very large hedge fund with a lot of internal capabilities but it needed a second price source for the structured credit piece of its portfolio. This was for the firm’s product control department in particular.

The vendor had a relationship with the firm prior to its acquisition, but a deal was not signed until after it became part of the Tullett stable. “We have been talking to them for quite some time and after the acquisition by Tullett Prebon, were able to re-engage them and bring the discussions to fruition quite quickly. They went through quite a rigorous due diligence process in terms of testing the half a dozen or so vendors. We stood out because we surpassed expectations surrounding valuation capabilities and service delivery,” explains Vanous.

The proof of concept or trial phase was a couple of weeks of testing the service and then the implementation and delivery was another week or so. Everything is delivered on an automated basis so the vendor was then able to get CQS up and running on the system in a month.

Humphrey is confident that CQS is the first in a long line of new opportunities in the market, which he reckons is booming as a result of regulatory change. “I think the valuations business as a whole is increasing, as more and more clients seek independent valuations, so I think the whole sector is due to grow. Certainly with the backdrop of regulatory change, there is the driver for independent valuations, so we are certainly being assisted by the regulatory focus at the moment,” he says.

He reckons Tullett Prebon, as an intermediary, is well placed for the type of information required and is well able to defend the complex corner of the market. As an interdealer broker, OTC Val’s information is not skewed by positions, he claims.

Moreover, OTC Val is actually courting other vendors as potential clients: “One thing that we are doing is starting to supply valuations services to valuations services companies. Whereas many are able to service the plain vanilla end of the market, valuations companies are coming to us to ask for our specialised services in the exotic end of the market. Whilst you would look at them as competitors, we have a good relationship with them and are in discussions with them about assisting them in areas of the market where it is hard to price. There are between six and 12 companies in that particular space.”

What is also next for the vendor is a further focus on increasing its scale and it has already hired more sales people to this end to tackle the global community of customers out there.

Subscribe to our newsletter

Related content

WEBINAR

Recorded Webinar: Real world data governance – Practical strategies for data ownership

The theories of data governance and ownership are well rehearsed. Essentially, data governance includes rules and processes that make data accurate, compliant and accessible, ensuring the right users can access trusted data as and when they need it. Data ownership assigns responsibility and accountability for a specific dataset to an individual or team that can...

BLOG

S&P Global to Acquire Data and Analytical Solutions Specialist Visible Alpha

S&P Global has reached an agreement to acquire Visible Alpha, a provider of industry and segment consensus data, sell-side analyst models and analytics from high-quality, exclusive sources. The acquisition will create a premium offering of fundamental investment research capabilities on S&P Global Market Intelligence’s Capital IQ Pro research and analysis platform. Visible Alpha provides consensus...

EVENT

TradingTech Summit London

Now in its 13th year the TradingTech Summit London brings together the European trading technology capital markets industry and examines the latest changes and innovations in trading technology and explores how technology is being deployed to create an edge in sell side and buy side capital markets financial institutions.

GUIDE

Regulatory Data Handbook 2023 – Eleventh Edition

Welcome to the eleventh edition of A-Team Group’s Regulatory Data Handbook, a popular publication that covers new regulations in capital markets, tracks regulatory change, and provides advice on the data, data management and implementation requirements of more than 30 regulations across UK, European, US and Asia-Pacific capital markets. This edition of the handbook includes new...