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

OTC Val Adds Valuation Capabilities for Hard to Value MBS and ABS Securities

Subscribe to our newsletter

OTC Valuations (OTC Val) has increased its valuation capabilities of illiquid mortgage backed securities, commercial paper, collateralised debt obligations, and other asset backed products. Bob Sangha, managing director at the vendor, explains that as well as providing a price, OTC Val is also focused on providing data on the modelling behind the price for these complex products.

According to analysis by the Market, Credit, and Risk Strategies group of Standard and Poor’s, Level 3 assets rose 15.5% from the second quarter. OTC Val contends that many of these securities are being reclassified as Level 3 assets as holders cannot rely on broker quotes or quotes without the level of price transparency required for financial reporting purposes.

It is therefore claiming to address these data issues via its valuation process, which it says is based on proven fair value estimation and model-based techniques. The vendor indicates that clients can use these techniques to satisfy audit and internal risk compliance requirements for securities with no direct market observable prices.

Sangha explains: “In this environment, market participants are as concerned about the assumptions and data behind a product’s price as the price itself. Our valuation methods enable us to provide the required level of transparency and disclosure. In addition, we employ a variety of reasonableness tests to ensure consistency and accuracy, while utilising (FAS 157 Level II) observable market inputs where possible. We also follow the recommendations from the IASB Expert Advisory Panel’s recent publication titled Measuring and Disclosing the Fair Value of Financial Instruments in Markets that are No Longer Active.”

Subscribe to our newsletter

Related content

WEBINAR

Recorded Webinar: Navigating a Complex World: Best Data Practices in Sanctions Screening

As rising geopolitical uncertainty prompts an intensification in the complexity and volume of global economic and financial sanctions, banks and financial institutions are faced with a daunting set of new compliance challenges. The risk of inadvertently engaging with sanctioned securities has never been higher and the penalties for doing so are harsh. Traditional sanctions screening...

BLOG

Record Debt Issuance Is Exposing The Bond Market’s Information Gap

By Swati Bhatia, head of fixed income, financial information at SIX. Sovereign bond issuance across the OECD’s member countries is predicted to have reach a record US$17 trillion at the end of last year, a scale of borrowing that would have seemed mind-boggling only a few years ago. On the corporate debt side, the total...

EVENT

Data Management Summit London

Now in its 16th year, the Data Management Summit (DMS) in London brings together the European capital markets enterprise data management community, to explore how data strategy is evolving to drive business outcomes and speed to market in changing times.

GUIDE

Entity Data Management

Entity data management has historically been a rather overlooked area of the reference data landscape, but with the increase focus on managing risk, the industry is finally taking notice. It is now generally agreed to be critical to every financial institution; although the rewards for investment in entity data management appear to be rather small,...