S&P Capital IQ’s acquisition of Credit Market Analysis (CMA) from CME Group last week is bearing fruit, with some CMA technologies already integrated and used in S&P Capital IQ offerings such as its evaluated pricing service.
As other services and technologies are integrated, CMA as a whole is expected to slot in alongside earlier acquisitions R2 and QuantHouse, filling a derivatives pricing gap in S&P Capital IQ’s offering as it builds out a holistic data solutions business.
The acquisition of OTC data specialist CMA was flagged early this year and S&P Capital IQ has been working towards the integration of its services for some time. Key to the acquisition are CMA’s Quotevision automated quote capture and aggregation service, its Datavision intra-day and end of day pricing feed and the Navigate workflow solution for OTC derivatives valuations.
According to Jonathan Reeve, executive managing director, enterprise solutions at S&P Capital IQ, “At the beginning of the year we established an organic acquisition strategy to fill capability gaps within S&P Capital IQ. We were looking for capability, talent and modern technologies rather than large revenue companies. CMA offers us what we were looking for. It gives us the ability to grow our evaluated pricing service in the derivatives arena and is complementary to R2 and QuantHouse.”
The CMA technology that appealed particularly to S&P Capital IQ is embedded in the Quotevision service that can be deployed across various broker dealers and compile quotes to provide an aggregated pricing stream. Trade prices used are actual, providing a more transparent and precise pricing solution.
Before the addition of Quotevision to its portfolio, S&P Capital IQ used mainly manual means to capture and aggregate price quotes. Explaining the role of Quotevision within S&P Capital IQ, Antoine Kohler, CEO of CMA, says, “Quotevision is a standalone desktop service that allows its users to parse and structure credit market prices received from trading partners in real time, and to visualise and mine that data. Quotevision will be deployed internally to automate the harvesting of OTC information received by S&P Capital IQ from various sources. This will provide significant operational alpha to our operations and will allow efficient integration into S&P Capital IQ pricing services.
“Quotevision will also remain as an external service to our joint clients and we will examine how it can be integrated into our other client facing platforms over time. We are also working on centralised data parsing services, in which clients send data to us and the output can be integrated by clients using application programming interfaces, by-passing the need for a graphic user interface or desktop.”
Reeve points out the ability to scale and deliver more accurate pricing evaluations using the Quotevision automated service. “We have already deployed Quotevision and Navigate for our evaluated pricing desks. Today, Quotevision covers derivatives, loans and bonds, but we could extend it to other asset classes and markets. The idea is to releverage it across S&P Capital IQ pricing services. As a world leader in US Municipal Bond pricing we will use Quotevision in this area next,” says Reeve.
If Quotevision provides in-bound quotes and aggregation, Datavision provides a corresponding outbound pricing feed for bonds and derivatives, a capability and coverage that S&P Capital IQ formerly lacked. With Datavision onboard, the company plans to combine all its pricing feeds and will cover a comprehensive list of OTC securities.
“One appeal of CMA is that all of S&P Capital IQ’s businesses have been users and consumers of its data in their products for some time, so the integration task will be minimal. We will integrate CMA’s capabilities into our pricing, desktop and enterprise business lines,” says Reeve. “We will also integrate CMA and its 70 employees based in London and New York into S&P Capital IQ. We haven’t made a final decision on branding, but will probably keep the CMA brand where it has equity and make all the other products part of the S&P Capital IQ brand. The value to customers is ease of operation and the ability to consume all the data they need from one company, perhaps pricing a portfolio with data from one supplier.”
Reeve suggests that combining CMA’s quote capture technology with R2’s portfolio risk and pricing engine will allow the company to reengineer its pricing services. These could then be distributed using QuantHouse’s real-time technologies. He explains: “CMA captures in-bound quotes, R2 does the math and calculations, and QuantHouse distributes the results at great speed. We are working on putting these three elements together. Our pricing desk is using the CMA technology offline, but it will go online in a couple of months, and some S&P Capital IQ services are being distributed over the QuantHouse network. These are small successes with low levels of integration, but the end state will be a larger vision with pricing services across all asset classes.”