Dublin-based fund administrator Quintillion, founded in 2006, has partnered with Markit for OTC derivatives valuation provision. Quintillion runs its fund administration business on front and middle office technology from Paladyne and the Advent Geneva accounting system. Tim Barker, executive vice president and head of valuations at Markit, says this relationship will broaden the vendor’s reach in terms of client base and the complexity of the instruments it values. “Quintillion is managing portfolios containing very complex instruments, so we expect to see more complex derivative instruments coming through for valuation,” he says.
Whether Markit contracts directly with Quintillion clients, or the relationship goes via the administrator, will be determined on a case by case basis, Barker continues. “We will consider either set-up. For the more complex portfolios it can be better for us to have a direct relationship with the client, because there is a dialogue that needs to take place, for example in a price challenge process during which we work through any issues there might be.”
The frequency with which Markit will provide valuations to Quintillion customers will depend on client requirements, and will range from same day to daily, weekly or monthly. “Most hedge funds only require an accurate dealing NAV – the best quality of independent valuation – on a monthly basis, but a number ask for them weekly for internal use as well,” says Barker.
Barker says for vanilla transactions Markit offers a high degree of automation around its valuations. “We have integrated our trade processing service (acquired through the purchase of Communicator last year) into our valuations service so that funds can upload their trade information to us and electronically affirm their positions with their counterparties,” he says.
“Through this process, Markit’s service matches all the important parameters required to price the portfolio, so there is no need to upload the portfolio into two separate systems. This means we know that what we are pricing is not only what the fund thinks it has, but that the portfolio has also been signed off by its counterparties.” For more complex trades, the emphasis is on bespoke valuations and accuracy rather than automation.