Regulatory demand for increased transparency is driving firms to revisit and enhance pricing and valuation processes, often using vendor technology.
A new report from Aite Group, LLC examines the importance of pricing and valuation of financial assets following the financial crisis of 2008. The report presents pricing and valuation approaches and the regulatory, accounting and operational factors that affect them. Within this context, the report analyzes the pricing and valuation services market, profiling five services and highlighting three.
The 2008 financial crisis has made clear to firms the importance of fully understanding the ramifications of the pricing and valuation function, especially as it relates to portfolio market, liquidity and counterparty risks. In response to this recognition, regulatory, accounting and market-driven factors relating to increased transparency will compel the pricing and valuation industry to revisit – and in many cases, enhance – their existing pricing and valuation processes. As such, Aite Group estimates that the pricing and valuation services industry’s revenues will grow from US$2.1 billion in 2009 to US$2.9 billion by year-end 2012. Response time to price challenge resolution and asset type/instrument coverage are the major determinants to pricing and valuation vendor selection today. Third-party solutions provide specialized strengths and varied functionalities, and can contribute meaningfully to the pricing and valuation process of many firms.
"Greater scrutiny by interested parties, coupled with changing regulations, accounting standards and changing dealer landscapes, has made the pricing and valuation process a high-visibility, high-importance business activity for years to come," says John Jay, senior analyst with Aite Group and co-author of this report. "This is no idle exercise, given that shoddy prices or unverifiable valuations may have a dramatic negative impact on a business’s regulatory capital, financing, compliance, risk management and fees."
The report reviews and analyzes pricing and valuation technology offered by Interactive Data Corp, OTC Valuations, Statpro, SunGard and SuperDerivatives. The report also highlights Thomson Reuters, Bloomberg and Markit.
This 42-page Impact Report contains 16 figures and seven tables. Clients of Aite Group’s Institutional Securities & Investments service can download the report at the Aite Group web site.
Related Aite Group Research:
• The State and Outlook of the Credit Default Market: Changed but Unbowed
• Game-Changers: New Financial Products and Platforms for Uncharted Territories
• RISK Is Not Just a Four-Letter Word: Buy-Side Multi-Asset Class Risk Analytics
• CDS Central Clearing: Look Both Ways Before Crossing
