Standard & Poor’s has upped the ante in the European pricing evaluations space by introducing five intraday pricing updates per day covering the complete universe of European securities. The move drives up the level of competition with dominant provider IDC, which provides end of day updates, and Reuters, which currently provides three daily updates, but is planning to move to five updates mid-year.
Standard & Poor’s focus is on illiquid over-the-counter securities, and includes its recently launched European ABS/MBS pricing service. The pricing updates will occur at 10am, 12pm, 2pm, 5pm and the U.S. close of business at 9pm U.K. time (4pm Eastern Standard Time). The need for more frequent updates is being driven by growing market and regulatory demands.
Peter Jones, director of Standard & Poor’s Securities Evaluations, Europe, says, “This solves a problem faced by a number of European funds that currently prefer to calculate their NAV intraday and have to rely upon previous market close data.
“The times correspond with when administrators and institutional funds are telling us they perform their NAV calculations. We have asked why these intraday times are significant and it is mainly due to operational processes and historical factors, as well as to fit with the close of markets in Asia and Europe. It is also the timing that many firms use when marketing their funds to clients.”
The higher frequency updates will be made available to existing clients as part of the service, with no additional charge. As Jones says, “We have found that many customers are not actually looking to use every snapshot update throughout the day, unless they want multiple snaps for different funds, but rather would like the flexibility of choosing a time that corresponds with their NAV calculation time.”
The expansion is being supported by a small, but growing team of evaluators being built up at Standard & Poor’s European headquarters in London. Jones, previously with Interactive Data Corp., has brought in a few former colleagues (see Industry Identifier, Page 16), and is planning to hire more staff, including one who will join the structured finance desk in the next couple of weeks.
There are now six full-time evaluators in London and over 35 globally. While the number is relatively small, Jones says, “We have invested in a lot of new technology and defined processes which offers economies of scale and allows us to be efficient in valuing securities. Our evaluators are senior, experienced evaluators and the areas we specialize in, like structured finance, are opinion-based as there generally is no market intelligence here, so we spend a lot of time researching things like spreads in the marketplace. This is different to pricing generic instruments where a lot of time is focused on reviewing available trade information.”
Standard & Poor’s launch of the ABS/MBS service is going well, according to Jones, who says around 30 prospects are currently beta testing the service. He also says that new areas of demand have unexpectedly emerged, such as collateral management, which need the data for margin calls and to identify liquidity pools.
Access is offered via the usual direct FTP service, or comma delimited file. It will also be made available via Standard & Poor’s new MasterFeed service, which was released in the U.S. last year, and the rest of the world a couple of months ago. The feed appears to bolster Standard & Poor’s pretensions of becoming a global source for pricing, reference and security identifier data, as well as ratings and fundamental descriptive information. It provides access to more than 6 million instruments, including equities and fixed-income securities, dividend announcements, credit ratings (from S&P Ratings), and descriptive information (from S&P Compustat).
The S&P MasterFeed also allows clients to cross-reference more than 360 data elements, using the Cusip, Sedol, ISIN and Valoren numbering systems, as well as their own identification methodologies. S&P runs the Cusip numbering system in the U.S.