UK-based ValueLink has extended its provision of data services to BNY Mellon Asset Servicing to include OTC counterparty price collection and data reporting.
The service for BNY Mellon, which ValueLink has been providing since the first week of December 2007, following extensive testing, is similar to that which the vendor has been providing to BNP Paribas Securities Services for some time (Reference Data Review, April 2007).
While BNP and BNY Mellon are the two most extensive users of this ValueLink service, the vendor does have other clients taking it, and is also hopeful of working with further customers on the OTC side during 2008, it says, as the challenge of increasing OTC volumes pushes manual processes to their limits.
ValueLink has counted BNY Mellon Asset Servicing as a client for many years in both London and Dublin, with London actually returning as a customer after a short period of working with another provider that failed to live up to ValueLink’s level of service, according to ValueLink operations director Trevor Beach. “We have been supplying validated pricing services for Dublin and London for their intraday and closing asset universes, and are currently supplying over 30,000 instrument prices each day,” he says. “Part of the original service included regular review meetings, and during those meetings we told BNY Mellon about the service we had been developing for BNP on the counterparty collection/OTC side. They expressed an interest in what we were doing and the decision was made that we would develop the service further to meet BNY Mellon’s requirements in terms of reporting.”
The ValueLink OTC counterparty collection service involves the receipt of security data from the trading brokers used by BNY Mellon. Each broker will send asset trade and price information to ValueLink in a host of varied and ever-changing formats. ValueLink is responsible for the automated data extraction from the different broker statements. This data is then uploaded and validated within ValueLink’s database. A suite of reporting enables ValueLink and BNY Mellon Asset Servicing to complete additional reconciliation and resolve any missing or potentially erroneous data.
Describing the service provided to BNY Mellon, Beach says: “The client sends us an incoming file on a daily basis, and ValueLink processes this file with deletions and additions so we have a master file of holdings. The counterparties send us emails to a designated address, and for BNY clients, data comes in Excel, PDF and html formats. We pull that information into our database in an automated fashion and then process that information against the file sent to us. Then we run a whole suite of reports against their holdings file. If there is information missing from the counterparty we will do extra work to resolve discrepancies for example with notional figures, currencies, trade dates and maturity dates. The reports are designed for internal use at BNY, and are supported with the actual price file.”
Beach says the flexibility of the ValueLink system made it straightforward to accommodate the slightly different requirements of BNY Mellon – such as taking in and sending out different file formats and extracting different fields. “The system we have here is very flexible, and to meet the different requirements for BNY simply required us to make some adjustments,” he says. “Because the set-up from the start was very flexible, the changes are not too demanding. Our system is designed to do only data validation, collection and mapping, so it is easier for us to accommodate new client requirements than it is for other providers with systems designed for a much broader range of services.”
If the data is available from any source, ValueLink can extract it, he adds. “That’s how our technology has been developed. And it’s completely scalable, so volumes are not a problem.”
Volumes are a key driver for firms to consider services such as ValueLink’s, Beach believes. “The clients we talk to have concerns about the volumes of these assets they are trading; growing volumes are a challenge when this is a manual process within an institution,” he says. “Since there is a shortage of the right, qualified people out there, there’s a staff issue as well. The benefits of our service are therefore risk reduction, a reduction in reliance on internal staff and the fact that we take away the headache of doing this from our clients.”
At BNY Mellon, various different departments have been manually processing this OTC data for different reasons, Beach adds, and now that duplicated effort can be eliminated. “The file BNY Mellon takes from us is not just used by the OTC team for pricing, but in different areas as well,” he says. “Previously they were duplicating processing for those different areas. Now they just take one file from us and reuse it.”
Matthew Cox, BNY Mellon Asset Servicing head of securities data management Europe, says: “OTC valuation is increasingly important. ValueLink has demonstrated its reliability and high service levels for many years as a key supplier of data services to BNY Mellon Asset Servicing. We were confident we could rely on them to deliver this important extension in the area of OTC counterparty collection and reconciliation reporting. The service provided, and their flexibility to offer further enhancement, will significantly support the development of our OTC valuation process.”