Following the launch of its derivatives valuations service last week, Jean-Paul Zammitt, global head of core product development for Bloomberg Financial Products and Services, explains to Reference Data Review that the vendor has been working with a group of beta customers for the last three months to fine tune the new offering.
Bloomberg was prompted to launch the new valuations offering because of its desire to offer its customers a more transparent approach to the derivatives pricing challenge, according to Zammitt. The vendor has offered end of day valuations for a broad range of fixed income and equity instruments through its BVAL product for a number of years. Zammitt indicates that for even longer it has offered derivatives pricing and analytics via the Bloomberg Professional Service. It was therefore a “logical next step” for the vendor to combine these two areas of expertise and add on the delivery of an end of day valuation service for derivatives, he elaborates.
Zammitt believes the service provides the transparency long sought by the financial marketplace, as well as government agencies and regulators. As noted by many industry practitioners, including Olivier Rose, head of international projects data management for Société Générale Securities Services (SGSS) recently, issues such as fair value and mark to market accounting have significantly raised the profile of pricing transparency across the market. Both the investment and regulatory communities are asking for more data around prices, including data on the source and quality of inputs supporting a valuation.
In order to develop the right functionality for the service, Bloomberg has therefore been working with a group of beta customers for the last three months, many of whom Zammitt indicates have already licensed the service. He claims this is part of Bloomberg’s overall endeavour to listen to its customers and to develop new products and services to meet their current and future needs. In this case, he claims it is able to provide an independent and transparent view of their derivatives portfolios that would be supported by a level of expertise and customer service on which they could rely.
According to Zammitt, one of Bloomberg’s hallmarks is to provide transparency. “Our goal is to provide our customers with the most transparency possible so they can better understand what is driving the value of their positions,” he says.
He describes the customer feedback thus far as excellent and indicates that as well as the beta customers, Bloomberg is also talking to many other firms with regards to licensing the service.
Although Zammitt declines to comment directly on the competition, he believes Bloomberg is delivering a superior service that meets the markets’ needs for increased derivatives transparency and accountability. The differentiating factor between Bloomberg and the rest of the vendors out there in the pricing space is its independent analysis, which Zammitt says is unparalleled in the market today. He says this is partly possible due to the vendor’s ability to deliver these valuations via the Bloomberg Professional Service, where its customers get direct access to the data and models behind the valuations.
The vendor is, no doubt, keen to capitalise on its current connectivity to clients in this manner and a key approach to the market will be in connecting the data dots between its various offerings out there. A common tactic in today’s highly competitive market, as firms seek to rationalise the number of vendors with whom they are dealing in a bid to bring down overall costs.
Going forward, Bloomberg is keen to keep an eye on developments across the market and Zammitt indicates that it is aiming to be consistent in its delivery of these new services and products, as and when they are announced. However, as for the question of what functionality is next on the development list for the vendor, he is keeping quiet. The competition is listening, after all.