Stephanie Sparvero is Global Head of Bloomberg’s Evaluated Pricing Service – BVAL.
What trends are getting underway that people may not know about but will be important?
Fixed income investors have always had a voracious appetite for data, and that is only continuing to increase due to an environment of shrinking margins and a move toward electronification. As a result, fixed income participants are experimenting to find the right mix of investing talent and scalable tools to navigate changing markets profitably.
It’s fair to say that everyone involved in fixed income now has some exposure to data strategy, data consumption, and data science. What this means for managers in the space is that they need to know how best to manage their people and their technology investments to make the most of their data.
While these may seem like purely operational concerns, during the course of 2020 and 2021, market volatility quickly made managing data both a bottom-line and a strategic concern. For example, people were asking, can we still trade or invest in these markets profitably? And, how can we incorporate and process all the data that we are seeing in our current systems to assist in making decisions?
The question of whether a firm approaches data and technology as a cost, rather than a driver of innovation, is likely to differentiate market participants for some time to come. As data consumption increases, in our role as an evaluated pricing provider, we are focused on helping our clients analyze and utilize pricing data more effectively and at scale.
What were the key themes for your business in 2021?
BVAL uses over 100 million pieces of data to provide evaluated pricing on more than 2.5 million bonds. To do this successfully, we are guided by four interconnected themes: transparency, world class customer support, a sophisticated methodology, and pricing data delivered how and when clients want it.
For us, transparency and customer support go hand in hand. BVAL details each step in the valuation process and provides insight into the data inputs and algorithmic methodologies used so our clients can justify and understand how pricing valuations are derived. Our goal is to maintain the combination of explainable, high-quality prices, quick turnaround for any pricing challenges, and strong relationships with our clients. Most importantly, we consider our clients partners in product development and we leverage information about their needs in our design process and use their feedback to continuously improve quality.
When it comes to our methodology, we combine the best of human markets experience with rigorous computational approaches. This helps us to maintain a structured pricing approach that’s reliable while being flexible enough to move with the market.
What are your expectations for 2022?
As for market influences in 2022, we will likely still be contending with volatility, inflation concerns, and the potential for central bank moves to end this long period of low rates. Incorporating any potential effects from these will be critical to the fixed income market. Our clients can rely on us not only for stability through a changing environment, but also for creatively delivering solutions, no matter what happens. BVAL is consistent and consistently evolving.