PIERCE LORD: Yeah, it’s a good question and it’s probably one of the most important questions. It is true that if markets aren’t moving very much, data from six hours ago may be the best data. If markets are moving quickly, older data can really hurt you if you’re using it and the markets have moved since then. So, with that in mind, you have to back up and think about the task at hand. You’re trying to price 2.7-2.8 million fixed income securities globally, and you only have five, six, seven percent of them, maybe eight percent, that have market data—trades, bids, offers, that kind of stuff. So, you have about 92 percent left over that you have to keep up with the liquid eight percent. That requires a big extrapolation, and at ICE, of course, we have technology, data, and model curves that we’re using to make sure the liquid space helps inform us about the space that is not as liquid. It can’t be slow, it has to be very, very fast. So really making sure you’re extrapolating on the space that has market color on the rest of it is important. Frankly, it’s one of the reasons we released our real-time pricing over five years ago actually was to kind of prove to the market that we do have a very tight process. If you’re pricing 2.8 million securities that are updating every minute or two, those prices aren’t going to be good if you don’t have a tight process. The process includes a big team of evaluators that are very specialized in their driven asset classes, who are leveraging the technology and the data, and even the dynamic outliers and things like that that were earlier mentioned to make sure the best data is getting in and to make sure the timeliness of the data is always looked at. In a very fast market, you need the most recent observations. You can’t have the part of the market that doesn’t trade very often kind of sitting, saying we’ll get to it later or tomorrow—no way. That’s not going to produce a good product. People aren’t going to want to pay you for that product. The timeliness of that is crucially important and I can’t emphasize enough: it is really a combination of people, the data, the technology, the team together because to be able to turn those things around always still requires expertise input. You even have situations where bonds that haven’t traded in a long time don’t get quoted in a fast-moving market. Like March of 2020, all of a sudden, they trade out of the woodwork so if you don’t pick up those trades quickly for that day they traded, your clients aren’t going to be happy. So, you really have to have a comprehensive process put together. So, it’s hard but with a tight process, I think it’s something that you can successfully stay on top of.

RAJAN CHIARI: You know, Pierce, maybe I’ll add to that just a little bit. What strikes me is when markets are really volatile, what you have to do is eliminate the tasks that aren’t that necessary and that you’re already doing or reporting. Think about in-house reporting that somebody may want to see—that you spend time doing but don’t necessarily have time to do. I think the ability to be on-the-fly and quick is about changing up some of the things that you’ve done historically. Things that don’t add any value to the process or aren’t accomplishing the end goal. I think it’s important for groups to do that. I thought the pandemic helped teach that. I think when markets are calm it’s easier to slip back into things that are comfortable but maybe there’s some things that need to be changed in order to survive going forward.

Listen to the recording starting at minute 32:27  of the Valuations Webinar

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