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Overcoming Data Challenges in Asset Pricing

In the intricate world of asset management, the pricing and valuation of portfolios represents a critical function that demands precision, accuracy, and adherence to regulatory standards. At the same time, it is clear that data challenges in asset pricing remain a central concern. In this blog, we explore these multifaceted data challenges and show how the IVP Pricing and Valuation Automation Solution can help overcome them.

Challenge #1: Gathering Data from Diverse Sources

During the asset pricing process, asset managers grapple with the complex and formidable task of collecting prices from a multitude of vendors, brokers, and internal desks. This intricate process involves synthesizing quotes from various sources, categorizing assets according to the waterfall hierarchy, and using these as references for comparison with other broker-dealer quotes.

Solution: Automated Data Synthesis

Implementing the IVP Pricing and Valuation Automation Solution facilitates seamless data collection from diverse sources. By automating the synthesis of quotes from vendors, brokers, and internal desks, the solution ensures a consolidated and standardized dataset. It also streamlines the data gathering process, enhancing efficiency and reducing the risk of errors associated with manual data collection.

 

Challenge #2: Quotes Comparison and Price Challenges

Fund managers, especially those overseeing credit funds, engage in due diligence by meticulously comparing quotes from different sources, including internal desks and primary/secondary sources. The labor-intensive process of identifying outliers and finalizing quotes for challenge initiation often requires extensive manual effort, particularly in the absence of an automated pricing process.

Solution: Outlier Identification

The IVP Pricing and Valuation Automation Solution incorporates intelligent algorithms for automated outlier identification. The solution not only identifies outliers but also expedites the process of finalizing quotes for challenge initiation. This intelligent automation significantly reduces the labor-intensive nature of the challenge process.

 

Challenge #3: Manual Price Revision

Once the outlier quotes are determined, fund managers embark on the challenge process. This involves sending challenge emails or utilizing dedicated portals to load challenged prices. The subsequent receipt of revised quotes triggers a manual update of pricing spreadsheets and a refresh of security prices, all of which consumes valuable time and effort.

Solution: Streamlined Price Challenges

With the IVP Pricing and Valuation Automation Solution, the challenge workflow is streamlined and automated. Challenge emails or dedicated portals for loading challenged prices are replaced with an integrated system. When the solution receives revised quotes, it automatically updates security prices. This not only eliminates manual effort but ensures a swift and error-free revision process.

 

Challenge #4: Integration of Diverse Datasets

Integrating data from diverse sources, including market data vendors, broker quotes, and internal systems, can be difficult. Differences in data formats, structures, and timelines may require a complex integration process that increases the risk of errors.

Solution: Unified Data Integration

The IVP solution functions as a unified data integration platform. In other words, it harmonizes data formats, structures, and timelines, simplifying the entire integration process. By providing a centralized hub for data integration, the solution minimizes the risk of errors typically associated with the integration of disparate data sources.

 

Challenge #5: Market Volatility

Rapid changes in market conditions, especially during periods of high volatility, can create challenges in the asset pricing process. The bid-ask spread may widen, for example, which makes obtaining accurate quotes more challenging and could potentially impact overall pricing accuracy.

Solution: Real-time Monitoring

The IVP Pricing and Valuation Automation Solution incorporates real-time market monitoring capabilities. During periods of high volatility, it offers complete visibility of changes in market conditions. This ensures accurate quotes are obtained promptly, which helps maintain accurate asset pricing even in turbulent market environments.

 

Conclusion

The IVP Pricing and Valuation Solution addresses all five of the data challenges outlined here, providing a comprehensive approach to complex asset pricing and valuation processes. By leveraging end-to-end automation, it simplifies and streamlines asset pricing, eliminating most of the tedious manual tasks. It also features a highly configurable pricing engine that funds can tailor to specific asset pricing processes. This flexibility accommodates a wide range of unique requirements and pricing rules, allowing funds to maintain control over asset pricing and valuation practices while minimizing errors and inconsistencies.

Learn more about the IVP Pricing and Valuation Automation Solution or contact sales@ivp.in to set up a live or online demo.

Pricing and Valuation Automation Solution

This solution provides pricing and valuation automation, connecting funds to leading pricing data vendors and brokers. It also provides a flexible, configurable pricing engine that caters to any pricing process. IVP’s solution is designed to automate and streamline the pricing and valuation process, which traditionally involves time-consuming tasks like data collection, rules application, and pricing tests, efficiently retrieving data from vendors and brokers, applying waterfall pricing rules, and ensuring that prices meet threshold checks. This includes handling highly illiquid securities and those from exotic asset classes.

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