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Interactive Data Makes Pricing Data Available Through ValueLink’s PriceValidation, Adds Valuations for ETNs

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Interactive Data Corporation had a busy Sifma with regards to its pricing and valuations business lines, as well as signing a deal with ValueLink to make data from its Pricing and Reference Data business available through ValueLink’s PriceValidation service, the vendor also announced that it will now deliver indicative intraday valuations for exchange traded notes (ETNs) and values for market indices.

Through PriceValidation, ValueLink acts as a service facilitator taking raw data from customers’ chosen data vendors and subjecting it to its own validation processes within client agreed deadlines for intraday and closing time slots. Now, Interactive Data’s intraday and end-of-day pricing data and evaluations will be accessible to customers through ValueLink’s interface with FTS.

Brendan Beith, sales director, Interactive Data Europe, says: “Interactive Data has been in discussion with ValueLink for about a year and mutual client requirements have been a key motivator in setting up the relationship.”

Stephen Choate, CEO of ValueLink, explains: “The wide ranging data is dual fed into ValueLink’s stringent six stage validation process, exceptions are resolved and validated files are available to clients 15 minutes after the valuation point. We have dedicated client administrators who provide responses to customer queries within 15 minutes and can tailor procedures to help meet specific requirements. We can also provide validation reports giving a full audit trail for compliance purposes.”

According to Beith, the process of setting up the data delivery to ValueLink was straightforward for Interactive Data. The vendor used the capabilities of FTS, its portfolio administration service, to deliver the necessary files, he explains.

Choate adds: “ValueLink was able to incorporate Interactive Data as a new data partner within six weeks of receiving client commitment. This included extending ValueLink’s core validation offering to incorporate Interactive Data as a new partner alongside two other vendors, and building a tailored suite of client specific validation routines and reports. The client was able to begin their UAT within two months of signature.”

Interactive Data’s other big news at the show was that it is now able to deliver indicative intraday valuations for exchange-traded notes (ETNs) and values for market indices. Interactive Data’s Basket Calculation Service, which previously only offered intraday indicative optimised portfolio values (IOPVs) for equity and fixed income exchange traded funds (ETFs), has been expanded to calculate intraday ETN IOPVs and index values that include equities, fixed income securities, currencies and commodities every 15 seconds.

Elizabeth Duggan, vice president of Interactive Data Pricing and Reference Data, explains the vendor’s decision to move to ETNs: “The motivation behind it was twofold: first, we tend to stay very close to our clients and work with them with regards to meeting their future requirements; and this is also an extension of our core competency, which is end of day valuations.”

According to the vendor, this offering uses different market inputs, including real-time data from exchanges around the world, and can make this information available to the exchanges through Plusfeed, Interactive Data’s consolidated low latency digital data feed.

Mark Hepsworth, president, Interactive Data Institutional Business, explains that these intraday indicative valuations for baskets of securities are currently being calculated and disseminated to nine clients, including four of the five largest ETF sponsors, via the Basket Calculation Service. “By expanding the Basket Calculation Service, we can provide financial institutions with critical intraday information to help them broaden their range of ETFs, ETNs, indices and other exchange traded structures,” he says.

Duggan adds: “The ETN market is smaller than the ETF market but it is growing. We have a handful of clients that are talking to us about our ETN offering at the moment. Issuers are looking for more creative ways to offer different investment strategies to the investor and an ETN is a different way to invest in an index without actually having to buy directly into the index.”

The vendor began offering ETF valuations at the end of last year and Duggan reckons the nine clients using the service, which includes Invesco PowerShares, represent a significant proportion of the market. In April, Interactive Data announced that PowerShares had expanded its use of the Basket Calculation Service to calculate IOPVs for its new municipal bond ETFs.

“We worked closely with our initial clients to understand what kind of service they needed. There were a lot of equity ETFs out there in the market at the time but it was really fixed income where our clients were interested in us providing valuations,” says Duggan.

The clients were working to an “aggressive” timetable, she adds, and this made it more of a challenge for the vendor. “Once we committed to the initiative, it took us less than six months to bring to the market.”

In the fixed income market, Interactive Data remains the only provider for real-time fixed income ETF valuations, contends Duggan. In terms of future additions to the service, Duggan is pragmatic: “Where we go next will depend on the creativity of the investment community. We tend to extend our asset class coverage based on our clients’ requirements.”

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