About a-team Marketing Services
The knowledge platform for the financial technology industry
The knowledge platform for the financial technology industry

A-Team Insight Blogs

Value at risk?

Subscribe to our newsletter

News that Telekurs Financial is entering into the evaluated pricing space under its own steam with a new Fair Value Pricing service for illiquid bonds prompts us to reflect on how busy the evaluated pricing arena is getting. If, as it has long been expected to do, Bloomberg finally unveils its evaluations offering this year, that busyness will be intensified further still. Reuters and Standard & Poor’s are making concerted efforts to emulate the success of market leader Interactive Data Corp in this business, and the darling of the credit derivatives pricing world Markit Group has CMA snapping at its heels.

It is important not to over-simplify the evaluated pricing picture – there is a world of difference between an algorithmically driven engine churning out prices for illiquid straight and zero bonds based on benchmark bond prices, and an operation combining the efforts of expert financial engineers and sophisticated modelling software to price complex derivatives and structured products. That said, the lines of distinction between vanilla and exotic instrument pricing activities are blurring as, though a combination of partnerships and inhouse development, the leading players seek to make their coverage as wide as possible, in order to be in a position to value as much of a client’s portfolio as possible.

There’s no doubt that demand for evaluated prices is high, driven by the growth in alternative investment strategies and the increasing regula-tory requirement for independent valuations of portfolios – with the word “independent” being ever-more literally applied, and the viability of relying on counterparty-supplied prices being ever-more questioned. The addressable market for vendors is also wide – ranging from hedge funds to traditional investment managers to corporates to service providers like fund administrators and prime brokers.

However, increasing competition in the vendor space must be a cause for concern for those seeking to play in this game, because to play properly is no cheap undertaking. It requires continued investment in the people and technology required to create prices for an ever-increasing pool of more and more complex instruments, and in the ability to deliver them at greater frequencies and in an automated fashion, to support clients’ own STP efforts. Clients are also demanding the provision of capabilities to enable them to validate supplied prices themselves. Scale is required to be able to provide evaluated prices at a cost low enough not to make clients think they can do it themselves more cheaply, but high enough to remain profitable. And as more vendors round on the space, the competition for a share of evaluated pricing spend will clearly get tougher.

Competition is rarely a bad thing for the consumers of services of course, but given the complexity of valuing exotic instruments, it is also in the interests of funds and funds servicers to have easy access to third-party supplied, viable, comprehensive evaluated pricing sources. Of course, one important factor which could mitigate against the potentially negative effect on providers of intensified competition is the growing regulatory requirement for firms to use more than one independent source of valuations.

Subscribe to our newsletter

Related content

WEBINAR

Recorded Webinar: An Agile Approach to Investment Management Platforms for Private Markets and the Total Portfolio View

Data and operations professionals at private market institutions face significant data and analytical challenges managing private assets data. With investors clamouring for advice and analysis of private markets in their search for returns, investment managers are looking at ways to gain a more meaningful view of risk and performance across all asset types held by...

BLOG

Modern Data Landscape Comes Under Scrutiny at Data Management Summit London

From data products and marketplaces to the new challenges of regulatory compliance and the latest thinking on unstructured data, A-Team Group’s Data Management Summit London 2025 took in the full breadth of topics that chief data officers and their teams are dealing with daily. With a line up of C-suite executives and expert speakers from...

EVENT

Data Management Summit London

Now in its 16th year, the Data Management Summit (DMS) in London brings together the European capital markets enterprise data management community, to explore how data strategy is evolving to drive business outcomes and speed to market in changing times.

GUIDE

AI in Capital Markets: Practical Insight for a Transforming Industry – Free Handbook

AI is no longer on the horizon – it’s embedded in the infrastructure of modern capital markets. But separating real impact from inflated promises requires a grounded, practical understanding. The AI in Capital Markets Handbook 2025 provides exactly that. Designed for data-driven professionals across the trade life-cycle, compliance, infrastructure, and strategy, this handbook goes beyond...