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CMA Enters Credit Pricing Arena With Buy Side Observed Data…

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Participants in the credit markets have access to a new pricing data source from CMA, provider of the CMA DataVision service now available via Bloomberg Professional. CMA, founded in 2001 by credit specialists and with offices in London and New York, says its credit default swap (CDS) pricing service is differentiated from competing offerings by the fact that the data is contributed by buy side firms, and by its emphasis on observed rather than derived pricing points.

CMA DataVision provides data for more than 2000 single name CDS, indices and tranches, delivered by 5pm London and 5pm New York time. As a result of CMA’s strategic partnership with Bloomberg, Bloomberg users can view the CMA data for free on the Bloomberg terminal. If they want to use the data in bulk to mark their books, they need a licence from CMA to download the data, or receive a daily price feed.

According to CMA CEO Laurent Paulhac, the possibility of partnering with Bloomberg had been in discussion for some time prior to the creation of the alliance. “DataVision is an emerging product for CMA, which we developed over the last couple of years,” he says. Historically, the vendor has provided a real-time price discovery service for credit professionals, CMA QuoteVision. The company decided to enter into strategic partnerships in order to reach a broader client base for DataVision quickly – “and there is no better partner than Bloomberg for that”, he says. “We have developed a close relationship with Bloomberg and it has been fruitful for us both. We expect, over time, to establish other distribution partnerships.” CMA is currently in negotiations with a number of prospective clients, many of which it was not in contact with prior to the data being available on Bloomberg, he says, adding “there is a consistent and continuing interest for our data via Bloomberg”.

CMA has created a consortium of 30 buy side institutions, which have agreed to contribute credit prices. “Our members contribute only pricing information from the front office, based on information observed in the market,” says Paulhac. This contrasts with other providers’ approaches, he says, where pricing information is taken from back office systems.
Another differentiatior, he reckons, is that CMA does not operate a “give to get” model. “Under such a model, if a member contributes pricing inform-ation for 500 names, it only gets 500 names back. This is the wrong incen-tive,” Paulhac says. “If the contributing member wants visibility on 1500 names but is only confident in its information on 1000, it may contribute 1500 names by providing a derived estimate on 500 entities. This clearly yields poor quality pricing information.” CMA’s 30-strong membership gives it broad coverage of the names in the CDS market, he says. “For less liquid names, we derive missing pricing points using state of the art derivation models, and mark all data points as observed or derived.”

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