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S&P’s Pagliaro Elaborates on the Details of its Valuations and Risk Partnership with Sapient

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Earlier this month, Sapient Global Markets and Standard and Poor’s Valuation and Risk Strategies (S&P VRS) signed a partnership agreement to provide their respective client bases with greater data and risk and pricing analysis capabilities for structured finance products. Reference Data Review speaks to David Pagliaro, senior director at Structured Finance Solutions for S&P VRS, about what prompted the vendors to team up.

Pagliaro explains that discussions between the two vendors began a little over a year ago, while they were working together for a joint client. “We realised that other customers would benefit from a partnership approach, so we made the decision to enter a more formal alliance and this announcement is the result,” he says.

In terms of how S&P feels the partnership will impact its own value proposition for the market, Pagliaro says: “For S&P VRS, this is a unique opportunity to bring our capabilities to market. It extends our distribution channels in a way that wouldn’t be possible outside of this partnership and – as a result – provides another avenue for customers to access our tools.”

Partnerships have certainly been a strong focus for both parties over the last few years, in keeping with the trend across the vendor community to team up to tackle certain functions and sectors. Back in May, Sapient Global Markets joined forces with risk analytics specialist Fincad to build on its risk and valuations offering to the market, for example. S&P’s ratings business also signed a deal with Selerity in the same month to join forces to offer low latency, machine readable credit rating announcements to the market.

The decision to go ahead with the Sapient Global Markets partnership was based on its business and technology consulting expertise and experience designing, developing and implementing large scale technology solutions, says Pagliaro. “Meanwhile, S&P VRS provides datasets and cash flow models that are a significant aid in improving transparency and risk management for our clients,” he adds.

Given that it is a partnership based around a bespoke application, not a lot of work is required at the outset. “There isn’t a large amount of integration work – but the products do not come ready made and off the shelf. There is customisation to be done on a case by case basis,” he explains.

In terms of plans to extend the partnership beyond its current remit, Pagliaro says that S&P is “absolutely” interested in this going forward. “We have already identified other joint opportunities in the US and Europe. We are definitely open to extending our partnership, including across other business units,” he elaborates.

S&P VRS has also been going through something of an identity crisis over the first half of this year, as the vendor rebranded to McGraw Hill Financial but retained the S&P moniker at a divisional level. The division now sits as part of the overall McGraw Hill Financial business, alongside S&P Indices, Equity Research and Capital IQ, all under the helm of Lou Eccleston.

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