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A-Team Insight Blogs

FIRMS’ Valuation & Risk Strategies Group Launches Valuations Transparency Initiative

Following the restructuring of the Fixed Income Risk Management Services (FIRMS) unit to combine its securities evaluations, valuations services and market research teams into one group last month, the Standard & Poor’s owned analytics and research group has launched a new transparency initiative for fixed income valuations. The vendor is now offering the assumptions data underlying its pricing and valuations via the FIRMS Global Data Solutions platform and the FIRMS Global Credit Portal, says Frank Ciccotto, senior vice president of the new Valuation & Risk Strategies group.

This assumption data, which details all the decision factors used in the assessment of structured finance securities asset prices, is now available from the Valuation & Risk Strategies group. The vendor claims this increased level of transparency will give investors, risk managers and accounting personnel an added perspective on the element components of portfolio valuation.

“One of the most critical issues confronting fixed income investors in the current market is price defensibility; any evaluation of an asset’s price must be able to stand up to rigorous analysis by risk managers, compliance officers and boards of directors,” explains Ciccotto of the driver behind the initiative.

This data is therefore essential to helping market participants maintain a balance between mark to market pricing and other market pressures that impact the valuation process. “Openly publishing the assumptions that go into our independent pricing analysis makes it possible for market participants to engage much more deeply in the evaluation process by understanding not just the market derived opinion of price, but also the significant individual variables that help to form that opinion of price,” he continues.

Later this year, Valuation & Risk Strategies indicates it will aim to provide similar transparency data for municipal and corporate securities, which will be made available to Valuation & Risk Strategies customers in a similar manner to the structured finance data.

Moreover, although the valuation assumption data is initially being disseminated to Valuation & Risk Strategies customers through a data feed, the data will soon be incorporated into a web-based solution that allows users access to current and historical data through a search engine or one by one lookup. The Valuation & Risk Strategies Web portal includes a price challenge tool along with transparency around structured finance pricing. The web portal launch is slated for the first quarter of 2010.

This is all part of the vendor’s strategy to extend its reach into the valuations and risk market with the launch of the new group and the release of a whole host of new data and risk offerings. Valuation & Risk Strategies is therefore based on what FIRMS calls its “core competencies” in the valuations and risk space, which comprises its Securities Evaluations, Valuation Scenario Services and Market, Credit & Risk Strategies product offerings.

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