The investment management department of an unnamed provider of life insurance, pensions and investment products has opted for weekly valuation reports of their exotic derivatives and structured product portfolio from OTC Valuations (OTC Val). According to Bob Sangha, managing director of the vendor, the valuations are used for collateral management and financial reporting purposes and as price verification of counterparty and front office quotes.
The service complements the firm’s in-house system, which is used to price the remainder of its portfolio, says Sangha. “With a heightened awareness of credit and counterparty risk, an increasing number of ongoing collateral calls are being imposed upon organisations, tying up working capital. As a valuation source, we provide our clients another data point on what each investment product is worth, independent of their counterparty’s or internal marks,” he explains.