First it claimed to be “open” and now it’s looking to be transparent: data giant Bloomberg has this week extended its valuation service to include pricing services for OTC derivatives. As part of its wider push in the financial services data space this year and in line with the efforts of its main competitors in the market, Bloomberg is aiming to provide customers with transparent pricing of derivatives instruments, including transparent access to the underlying models and assumptions that have gone into its valuations.
Jean-Paul Zammitt, global head of core product development for Bloomberg Financial Products and Services, explains the focus is on allowing firms to have confidence in the accuracy of the data and assumptions that have gone into their valuations and thus take the correct portfolio and risk measures required. The new Bloomberg Derivatives Valuation Service is therefore an extension of the Bloomberg Valuation Services (BVAL) offering, which currently provides end of day valuations for around six million publicly available securities and is integrated with the Bloomberg Professional Service portfolio.
The new service will charge users according to the complexity and size of the derivatives portfolio that is being valued and it uses market standard quantitative models to conduct these valuations for derivatives and structured notes. Users can access their evaluated positions via end of day data files and through a dedicated portfolio manager on the Bloomberg Professional Service, which the vendor claims allows users to more easily analyse the terms of the deals.
“The increasing sophistication of the global marketplace, combined with increasing regulation, means that financial professionals, government agencies and regulatory bodies must have pricing tools that are accurate, reliable and defendable, so they can generate accurate portfolio and risk measures,” says Zammitt.
Andrea Danese, global head of data solutions for BVAL who was appointed back in November last year, adds: “BVAL sets the standard for providing the highest quality in market data, the most robust controls and strongest levels of confidence from our customers. Our mission is to deliver the tools that clients need to properly value their positions for trading, analytical and risk needs.”
Danese joined the vendor from consultancy firm Fusion Advisory Partners, where he was co-founder and managing director for just over a year, prior to which he was CEO of Tullett Prebon Information Group. Danese is currently based in New York and charged with leading Bloomberg’s data efforts, which given his experience at Tullett and Creditex, where he was focused on the credit default swap (CDS) market, positions him well for heading this derivatives valuations initiative.
Bloomberg is facing tough competition in the market however, with major competitors Thomson Reuters, Interactive Data, Markit and SIX Telekurs all jockeying for the prime seat at the valuations table. Every month it seems that one of them has added a new function to their portfolio of services, such as Interactive Data’s recent broadening of its interest rate swap valuation service. And they only represent a fraction of the number of players in the valuations space at the moment.
It will be interesting therefore to see how Bloomberg’s derivatives offering stacks up against the more established vendor solutions in the complex products valuations niche, such as SuperDerivatives and Numerix.