Study: Firms Turning to Third Parties for Derivative Valuations
The risks posed by incorrect pricing of derivatives are driving a fundamental shift in the marketplace, according to a survey from Vancouver-based OTC Valuations and the Professional Risk Managers International Association (PRMIA). Firms are increasingly turning to independent providers to gain greater insight into the models, methods and market data used to generate prices, says the report.
Results of the study, for which 433 individuals--including risk managers, regulators, consultants and vendors--from 77 countries were surveyed, indicate that "while most firms would prefer to have the valuation component in-house, realistically, in terms of infrastructure and technology, many are choosing to outsource that component," said Bob Sangha, managing director of OTC Valuations, a provider of valuation services for over-the-counter products. Wilmington, Del.-based PRMIA is a nonprofit association of risk management professionals in over 180 countries.
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