In a bid to keep up with customer requirements for prices across a broader range of instrument types, Reuters is currently testing a capability to price equity derivatives, with a view to making equity derivatives prices available to all clients in the third quarter. Increasingly, consumers of evaluations have a growing abundance of sources to choose from when it comes to pricing more “vanilla” derivatives. In response, Reuters is constantly looking to flesh out its coverage of the less vanilla markets, according to Fabien Bulabois, a senior fixed income evaluator at Reuters in London. “Reuters is exploring many less developed markets such as derivatives and structured finance transactions,” he says.
One of the new battlegrounds for providers of evaluated prices is set to be collateralised debt obligations (CDOs). These are among the instruments for which funds and administrators are struggling to find prices today, and we are likely to see a number of the evaluated pricing suppliers coming to market with CDO offerings in the coming months. Bulabois says while “currently Reuters does not offer CDO tranche pricing”, it “does provide evaluated and contributed pricing on underlying collateral that backs the tranches”. Asset-backed securities have also been a focus for Reuters which, he says, provides terms and conditions and pricing coverage for ABSs. Pricing for credit default swaps (CDSs) is also available, Bulabois adds. “Reuters provides both CDS credit curves from broker contributions and net present values from the evaluation team,” he says. “Reuters currently has access to over 15 dealers for this information.”
Reuters is also responding to the growing requirement from clients to provide additional data around the prices, to enable them to validate prices in their own shops, Bulabois says. “Reuters provides all data and assumptions with the price. Some of this data includes coupon, maturity, benchmark curve point and spread.”