Standard & Poor’s Securities Evaluations, a global provider of independent securities evaluations and derivatives specialist SuperDerivatives have established a sales and marketing alliance to target the fixed income securities and OTC and exchange-traded derivatives market. The resulting combined offering represents the largest independent valuation portal in terms of both geographic and asset class coverage.
The joint offering will provide both companies’ models and market data-based pricing services covering valuations for instruments, including government, municipal and corporate bonds, syndicated loans, asset and mortgaged backed securities and money market instruments. The services will also cover vanilla and exotic OTC derivatives and exchange-traded derivatives on major asset classes including foreign currency, interest rates, commodities, energy, equities and credit.
According to Ed Crouch, global head of corporate development and strategy at SuperDerivatives, the firms have been in discussions about a potential alliance for some time. “We started talking about this in earnest in mid-2007 or earlier,” he says.
The discussions were prompted by a range of factors including market events such as last year’s credit crunch and the ensuing focus on the risk posed by derivatives to institutions’ bottom lines. “It seemed very clear that to customers in the market, the valuation landscape was insufficient to meet their requirements,” Crouch explains. “We saw that the existing marketplace was, and still is, very fractured. There are a number of competitors in this market that are very small, but we have the requisite attributes to be a global provider by combining our efforts and servicing the market more comprehensively.”
“I think what has been going on in the market over the past year has certainly focused both our minds on the project,” adds Peter Jones, director of Standard and Poor’s Securities Evaluation.
These events prompted the two firms to begin discussions about how they could work together to offer an independent comprehensive solution to their respective customer bases. “What we found is that S&P and SuperDerivatives have a great deal of simpatico in our approach to our businesses, our coverage universe and our philosophy about where the market is headed,” says Crouch.
Crouch reckons the “best solution” for the market can be measured in three ways and the alliance will enable both firms to meet those requirements. It must have comprehensive coverage of all the requisite asset classes in the market, have very flexible technology to provide customers with an intuitive interface, and be able to service customers all around the world in a seamless fashion, he contends.
“We have been talking to several clients and prospects about the idea of what we are doing and certainly those people have been very positive and consider it to be a strong proposition,” says Jones.
“The global customer opportunity is enormous – it ranges from the global custodian to individual pension fund administrators and hedge funds,” says Crouch. “It includes any organisation that has a book that includes both securities and derivatives, which is effectively every financial institution in the world.”
Jones adds: “The main focus of this alliance is to achieve global reach and global scale. We’re going to be very aggressive on client numbers.”
From the US side, Crouch reports that this customer approach has already begun. “We had our first joint customer meeting this week and that customer is thrilled at this alliance. Not only do they want to transfer all of the existing business that they have with both parties to the new offering, they also intend to dramatically increase the amount of business that they do with us.” Jones adds that this is also the case in Europe and reckons that a few customers are close to signing up.
“The alliance has its own committee that will be working together on the sales side,” expands Jones. “We have put forward Damian Burleigh, who is managing director of global sales at S&P Securities Evaluations, and SuperDerivatives has nominated its global head of sales and support, Russell Levi.”