Contract Win of the Year: Bloomberg

With regulation continuing to drive change in the evaluated pricing space, the area remains a hot spot for activity—both in terms of product innovation from vendors responding to growing demand and firms signing up for new services. Not surprisingly, readers voted for a deal in this field as this year’s Contract Win of the Year, with Bloomberg hitting the mark with its municipal bond pricing deal with Capital Group.

In April 2017, Bloomberg announced that asset management firm Capital Group had selected the Bloomberg Valuation Service (BVAL) to benchmark and corroborate end-of-day values of municipal bond positions. Varun Pawar, global head of evaluated pricing at Bloomberg, says the deal followed an “extremely diligent process,” and the firm chose BVAL for its coverage of municipal bonds, its team of evaluators and the transparency the pricing service brings to the market. 

After consolidation in the vendor space in 2017, Pawar says Bloomberg had an opportunity to fill a gap in the market for municipal bond pricing, “reinforcing to the market that Bloomberg is committed to the pricing space.” BVAL has earned a reputation for its broad coverage of municipal bonds and, according to Pawar, has upward of 99 percent coverage of customers’ portfolios in this space. “There’s very little of the municipal market we don’t cover right now,” he says. 

Last year, Bloomberg also enhanced its BVAL Municipal AAA Curves—the vendor’s representation of where AAA municipal bonds are trading on a daily basis. These additions saw BVAL clients gaining improved insight into municipal bond pricing, and means users can better understand price movements. “A lot of our clients see tremendous value in that additional transparency,” says Pawar. 

It is this focus that will continue to drive innovation for BVAL in the coming year. “We will be making sure we bring transparency and additional data to the space,” says Pawar, adding that customers can also expect to see a focus on elements of the technology. 

For pricing providers in general, the challenges going forward will go beyond helping customers meet new regulatory requirements and include ensuring models are robust enough to withstand changing trading conditions. “The market overall has been relatively flat over recent years, and where we should see a differentiating factor [between vendors] is in terms of volatility and how accurately pricing providers reflect that,” says Pawar.

Read more about the IMD/IRD Awards 2018 winners