Thomson Reuters launches independent valuation risk service

Date: Wednesday, September 17, 2008
Author: Hedgeweek.com

Thomson Reuters has launched a global service that aims to provide financial institutions with independent valuations across various asset classes and instrument types, and which it says meets calls from the UK's Financial Services Authority, other regulators and industry participants for fair and transparent valuations of financial instruments by independent and unbiased third parties.

The firm says shifts in volatility and correlation as well as liquidity constraints are having a massive impact on valuations and demonstrating the limitations of conventional pricing methods.

The Thomson Reuters Valuation Risk service provides what the firm describes as an 'open model' approach to pricing and valuation, and says it should lead to greater transparency, agility and proactive risk management.

The service is aimed at the full spectrum of financial market players including buy- and sell-side institutions as well as corporations, and is supported by a dedicated team of valuation experts working closely with customers in New York, London and Tokyo.

The Valuation Risk service combines Thomson Reuters global pricing and security reference data service with its risk management portfolio Kondor and Reuters 3000 Xtra pricing libraries.

The open model approach enables the simultaneous use of the bank or firm's own models alongside an unlimited number of external libraries, offering transparency and coverage across asset classes. The breadth, depth and precision of the underlying data are designed to ensure integrity and consistency of valuations enterprise-wide and provide compatibility with third-party systems.

The service provides valuations across asset classes and instruments including corporate bonds, bank loans, residential mortgage-backed securities, asset-backed securities, structured products and derivatives.

'The current financial crisis has exposed the importance of independent and transparent valuations,' says Jon Robson, president of the enterprise business at Thomson Reuters. 'To achieve the level of transparency investors deserve and regulators require, firms need the support of an unbiased independent supply of traded prices and data that allows clients to reverse-engineer and evaluate derivative structures with multiple models and methodologies.'