PIERCE LORD: First, it goes about saying that the regulatory environment is putting more onus of responsibility on the firms themselves, even the boards of those firms, to make sure that they understand how their bonds are priced, the method that is used, the inputs, all those types of things. They cannot just outsource how that happens. Yes, they do pay people like ICE and other firms and vendors to produce those prices, but they must really understand where those prices come from. So increasingly we are hearing from clients that they want to get more transparency around the pricing, some of those same things we have touched on. What are the types of sources you use? Is there a size component? Do you use trades for that price right there? How do you calculate your bid, ask, spread? Those types of transparency items, extra data or metadata around the price—those are things that our clients are asking for. There are also a couple of other things at play. Clients are looking to price their books more often. Some firms used to do just monthly, and even the folks that used to do just monthly have started updating those prices a week before, then three days before, then two, then one, and they’re trying to get ahead. They are looking at those prices not only to challenge the vendor on an outlier here and there if they think something is amiss, but just to get more transparency from the vendor on those couple of bonds that may not be as liquid. We are even seeing people looking for intraday prices in particular markets now. So, at ICE we have something called CVP, or continuous value pricing. So, we are pricing not just at the end of the day for 2.7 million fixed income securities globally, we’re pricing them all intraday so we’re picking up the spread movement, as well as the rate movement for different asset classes around the globe. That’s something where, especially the front office, in this day and age, they don’t want to be a half step behind. So now you have the front office looking at intraday prices using them in their workflow, but also use them to communicate to their back offices about bonds they are looking to buy, and they haven’t bought. That also allows the back office to get intraday prices a couple of hours before close or whenever they want to look at it so that their end of day workflow can be tighter and faster. More people are moving to four o’clock now so that kind of tightens your window and 40x and folks like that have a tight window to get things done, so really getting insight into those prices before the monthly mark is key to a lot of clients so that’s something that we’re really trying to help them with the transparency and the frequency of those prices.

RAJAN CHIARI: One thing I’ll add—I think part of the goal for anybody is to use the data that exists in-house and figure out how to bring that in. Historically that was difficult. Some of it was because of available options, some of it was technology, just not being able to do it in a fast enough manner. You would have to do it on a more lagged basis, particularly in the 40x space where you need to do things daily, but you’d have to do it after the fact. One of the key things that we’re seeing folks at least consider, and we certainly saw it heavily during the pandemic, was the use of more dynamic thresholds for tolerances between days, and really as opposed to using a stale kind of three percent change is something I want to look at and really having some false exceptions, meaning having to dig into lots of things that changed when really the market moved or you would have expected based on the transactional activity that the market would have moved such x percent up or x percent down. Using and being able to build that into your daily thresholds can either a) reduce exceptions or b) get more truer exceptions—things that you really would want to investigate so I think that’s forthcoming because the availability of the data and the availability of the technology to pull it in is on a real-time basis. So, I’m bullish on the future, let’s put it that way. I think it steps in the right direction to help folks with what they need to accomplish and really getting to achieve what we’re all after which is truly a fair value that’s fair for investors particularly buying in into products.

Listen to the recording starting at minute 22:47  of the Valuations Webinar

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