Spring is in the air – well it certainly is down in the South West of France where this issue comes to you from. And ’tis the season to be excited about pricing evaluations it seems. Just a quick glance at this month’s table of contents will show how this space is really hotting up.
The big news: Bloomberg is finally getting its act together and jumping into the analyst-based price evaluations business, building up a team to be run by ex-EJV chief John Lynch.
This is hardly a surprise. Bloomberg’s traditional dominance in fixed income data makes it well positioned to round out its offerings there with quality evaluations data. But what will Bloomberg do that will give it an edge over the competition? Will it be the integrated availability of evaluated pricing alongside its must-have terms and conditions descriptive data and other content? Or will it go further and differentiate by focusing on hard-to-price, more complex securities such as derivatives and structured finance.
Only time (or a few well placed sources) will tell. But it is clear that competitors should watch out.
FT Interactive Data is a long time champion of the evaluations data business. It has enjoyed much success as one of the only suppliers in several niche instrument areas. But this franchise is now under threat.
As loyal Reference Data Review readers will know, players like Reuters and Standard & Poor’s have been devoting much energy to building up their offerings here and FT Interactive Data’s franchise is the target in their sights.
For Reuters, the purchase of Bridge and its EJV pricing business gave it an ‘in’ to the elusive fixed income space that it had long desired in order to compete with archrival Bloomberg. And it is EJV that has formed the cornerstone of its efforts to build an international bond evaluations data service. But while Reuters has been working hard to build up this business, particularly in Europe, some former EJV clients perhaps feel that they are missing out on the previously close relationship they had with EJV. Other vendors must be viewing this as an opportunity.
Standard & Poor’s, meanwhile, has been building up its own European evaluations data offerings and, having rid itself of the exclusive distribution deal it originally had with Telekurs, has become serious about the business. More and more news is filtering through of products it is creating to target niche and hard-to-price spaces.
Now we can add Bloomberg to that list of companies vying for a piece of the evaluations action. Why all the activity now? Well, as readers of A-Team’s survey on evaluated pricing last year read, regulations are calling for increased transparency, accurate reporting and compliance, and risk management. But the growth in complex instruments such as structured instruments and derivatives being used by firms to remain competitive and mitigate risk are also contributing to the need for broader and more accurate coverage of this securities universe. Expect more attempts by all players to carve out niches in the evaluations space. For some, this will entail expensive investments in staff, for others, previously unthought-of relationships with partial competitors… Watch this space.