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

A-Team Insight Blogs

Does the World of Valuations Need Common Data Formats?

Subscribe to our newsletter

The need for data standardisation is well understood in many areas of reference data (albeit poorly implemented or non-existent in actuality – concept rather than reality being the operative word), but the world of valuations data has largely remained untouched by standardisation initiatives to harmonise vendor formats. Guy Sears, director of Wholesale at the Investment Management Association (IMA), raised this very subject at the recent SIX Telekurs roadshow on pricing in London, indicating that the introduction of standardised formats might make the lives of valuations teams much easier and bring down costs to some extent.

The topic came up as a result of discussions about the amount of non-numerical data that must now be provided along with a price, especially evaluated prices for illiquid securities. Vendors are providing this data (in varying quantity and quality, according to practitioners) to those that request it, but it is being provided in non-standard and often proprietary formats. This makes the task of comparing and contrasting this data from different vendors in a dual sourcing model much harder, agreed panellists. Hence the idea of standardisation reared its familiar head.

Surprisingly, SIX Telekurs’ own market development manager Richard Newbury indicated that the vendor would not be averse to such a move. “We have already adopted common formats such as ISO standards for the corporate actions world, so we would be willing to do the same for other areas,” he told attendees. “However, as we are not just talking about numbers, it would be a huge project to take on to standardise the whole area of reference data.”

Given the trials and tribulations involved in deciding on a legal entity identifier for the market, Newbury raises a good point. There’s no doubt that such standardisation would be beneficial – it would allow for greater flexibility of switching vendors, provide greater transparency across vendors etc – but who would lead the charge? Regulators and some industry participants are keen on the one utility model for this data – should one such utility (the Office of Financial Research, for example) aim to be all things to all reference data practitioners? We shall see.

Another bone of contention during the panel discussion was the level of service being provided by some vendors, although names were not named. Marcel Guibout, executive director of the fund accounting product in EMEA for JPMorgan Worldwide Securities Services, noted that the attitude of some valuations vendors regarding sharing underlying calculations and models for pricing data was less than desirable. “Some see this data as proprietary and therefore don’t provide us with pricing transparency. This will have an impact on whether we choose to work with them in the future,” he cautioned.

The IMA’s Sears suggested that perhaps valuations vendors and brokers providing pricing services should be subject to the same level of scrutiny as credit ratings agencies by the regulatory community. He noted the similarity between the potential conflicts of interest involved in the pricing process and in determining a rating. Guibout agreed that this could be warranted. Vendors be warned.

Subscribe to our newsletter

Related content

WEBINAR

Upcoming Webinar: A practical guide to dual UK and EU regulatory reporting as the Temporary Permission Regime comes to a close

Date: 19 July 2022 Time: 10:00am ET / 3:00pm London / 4:00pm CET Duration: 50 minutes The Temporary Permission Regime (TPR) allowing capital markets participants in the European Economic Area (EEA) to continue to operate in the UK post Brexit will be withdrawn by the end of 2023, calling on firms that want to stay...

BLOG

GLEIF CEO Stephan Wolf Discusses Progress of the LEI and Plans to Increase its Growth

The Legal Entity Identifier (LEI) crossed the 2 million mark of identifiers issued, experienced organic growth of 15% despite no major regulatory implementations, and held a steady 65% renewal rate through 2021. Moving into 2022, projects set up by the Global LEI Foundation (GLEIF) to expand LEI issuance are expected to take off, and the...

EVENT

TradingTech Summit London

Now in its 11th year the TradingTech Summit London brings together the European trading technology capital markets industry, to explore how trading firms are innovating in today’s cloud and digital based environment to create flexible, scalable trading platforms to support speed to market and business agility.

GUIDE

ESG Data Handbook 2022

The ESG landscape is changing faster than anyone could have imagined even five years ago. With tens of trillions of dollars expected to have been committed to sustainable assets by the end of the decade, it’s never been more important for financial institutions of all sizes to stay abreast of changes in the ESG data...