Independent derivative valuations increase price transparency
OTC Val signed one of the world’s largest providers of life insurance, pensions, and investment products. The firm’s investment management department receives valuation reports for their derivatives and structured product portfolio from OTC Val. These valuations are used for collateral management and financial reporting purposes and as price verification of counterparty and front office quotes.
After a lengthy due diligence process, which included an extensive trial, the investment management department selected OTC Val, citing responsiveness and ability to deliver transparent and custom reports as differentiating factors in their decision process. The service complements their in-house system which is used to price the remainder of their portfolio.
Bob Sangha, a founding member at OTC Val comments “With a heightened awareness of credit and counterparty risk, an increasing number of ongoing collateral calls are being imposed upon organizations, tying up working capital. As a valuation source, we provide our clients another data point on what each investment product is worth, independent of their counterparty’s or internal marks. We are pleased to have been selected as their primary source for the pricing of their exotic portfolio."
Sangha adds “Typically our clients already handle their vanilla and liquid trades via an in-house or third party system given the relatively less complex nature of these trades and underlying data. Our focus has always been on exotic derivatives, structured products, and illiquid securities that are priced in our production system. This approach has allowed us to take advantage of economies of scale and offer a compelling solution to clients where accurate price verification for that troublesome 5 or 10% of their portfolio has not been fully implemented.”
