BNY Mellon's Kerry White on Mitigating Valuation Risk

Whether a story is about swimming with turtles in the Maldives, or being in the crowds outside Buckingham Palace on the day of the Royal Wedding, sometimes there is simply nothing more suitable to say than: “You had to be there.” The value of first-hand experiences is regularly highlighted by philosophers and motivational speakers, but it is equally cherished by the financial services industry—particularly when it comes to passionate professionals who have experienced being at the front line of the data management challenge.

Kerry White, a 16-year BNY Mellon veteran, is one of these industry experts who started on the front line. In the first 10 years of her career she worked in fixed income, running the back office. She was responsible for getting the prices, but they were not always anywhere to be found. Her group then had around 50–60% coverage in terms of the daily pricing data. Now, her back-office clients see closer to 90% coverage.

White has been managing director, global product management at BNY Mellon Asset Servicing for the past three and a half years, a period when evaluated pricing has been a big focus area. She took up the new position just after financial markets had taken a nose dive, and the meltdown led to a string of changes.

Yet, the list of what has changed since White was apointed to the global position links back to the problems she faced at the very beginning of her own career. Availability of prices was a particular challenge “when we looked at the more esoteric asset classes,” she says, but vendors have in recent years expanded coverage and firms are now less likely to be stuck on a price.

In the pricing space, the vendors have in fact been significant beneficiaries. White says there are more customers asking for evaluated prices. “We’ve had to expand the operations to be able to take in more sources,” she says, adding that it is not only about taking a secondary source, “but more often a tertiary source as well.”

The request for more data also relates to the growing focus on mitigating risk. White says one of the strategies her team has used to deal with this has been to hire and train subject matter experts. “One of the most important factors for us is training,” she says. “The professionals looking at the prices need to be well-trained.”

To ensure they have the necessary expertise, BNY Mellon allocates resources on an asset class basis. White says the group is focused on providing continued training, and pricing vendors can sometimes also play a part in this education process. “Education and making sure the knowledge base is there is the most important aspect in terms of minimizing risk,” she says.

As firms have expanded pricing teams, the focus on people has increased. “The number of experts we have has changed,” says White, and in terms of their background, “we probably have more demanding requirements now.”

When hiring pricing specialists, the group looks for people who can react quickly and are “able to pick up the phone and have a knowledgeable conversation with vendors.”

In addition, the pricing experts are encouraged to utilize the 50,000-strong workforce at BNY Mellon, which includes a number of boutique investment firms. White says one of the benefits of being in the pricing group at BNY Mellon is the opportunity to share prices and tap into this knowledge base.

“If the subject matter experts see some strange-looking prices, they can contact peers within the boutique firms they may know, who also have a direct relationship with the portfolio managers, and check if they are seeing the same things,” she says, explaining that this may in fact be one of the first stops for pricing experts when validating a price.

The importance of getting it right never changes. That is a given for someone from the front line.