Pricing Partners is meeting growing interest in unstructured products with valuation services for proprietary indexes created by banks to support investment in risky and non-risky assets, while making trading rules transparent to investors.
The company’s valuation services for proprietary indexes went live last month and it is already working with a handful of Tier 1 global investment banks that it cannot name but were existing clients. Initial services support dynamic trading strategies based on volatility and returns, although the company says wider strategy coverage will be developed in line with investment banks’ developments. The electronic service provides valuations on a daily basis a couple of hours after markets have closed.
According to Eric Benhamou, CEO at Pricing Partners, “Over the past few years people have been reluctant to invest in unstructured products as it was difficult to know exactly what was being done. This meant banks started to push for proprietary indexes that mimic hedge funds but have better transparency as the trading rules are disclosed and investors know how the bank will invest.
“To ensure transparency and accuracy, the banks need independent valuation of their proprietary indexes and this is where Pricing Partners comes in, providing independent valuations so that investors can see that there are no errors in a bank’s valuations.”
Pricing Partners says it is first to market with valuation services for proprietary indexes, but Benhamou expects other pricing and valuation vendors to follow soon.