Pricing & Valuations special report


April 2013 - sponsored by: Interactive Data, Numerix, SIX Financial Information

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Trust and Credibility

In this Special Report on Pricing and Valuations, you will find in both the News Review (page 6) and the Virtual Roundtable (page 8), that doubts about pricing methods, concerns about transparency of pricing and consideration of the credibility of pricing sources are all frequent themes whenever pricing and valuations are our subject.

In "Hedge Funds Remain Doubtful of Evaluated Pricing Methods," Wells Fargo's Daniel Johnson tells us that end-users' comfort with vendors' evaluated prices is a matter of debate. Justifications of prices, Northern Trust's Paul Sharkey adds, cannot be delivered as a "90-page PDF." They must be short and to the point.

Transparency of pricing, Kerry White of BNY Mellon says in the Roundtable, is just one important element. Her firm's approach is to use a combination of vendors to produce quality information. Interactive Data's Mark Hepsworth observes that firms are indeed "stepping up" demands on vendors for transparency. And Steven O'Hanlon of Numerix identifies transparency as "critical for institutions," as well.

White also points to credibility as a high priority when considering pricing sources. To be credible, in her experience, BNY Mellon has to provide multiple vendors' valuations to its clients. Valuations, as SIX Financial Information's Ian Blance says, are a "trust business." To be trustworthy, pricing providers must be able to justify their methodologies, inputs and assumptions, he adds. Transparency can also contribute to trustworthiness and credibility.

The Roundtable, and this Special Report, contain more than mere urgings to make pricing trustworthy, credible and transparent. You will also find thoughts and coverage about how to go about achieving these virtues.

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