Regulations and fragmentation drive demand for evaluated pricing services.

Demand for bond pricing services is soaring in Asia as a result of regulatory changes and an increasingly fragmented marketplace.

There have been a number of regulatory changes in Asia Pacific over recent years, both at a regional level and globally with the harmonization of accounting rules (i.e., IFRS rule changes).Regional regulatory changes include MAS (Monetary Authority of Singapore) which relates to new rules for collective investment schemes.

“This has resulted in a focus on independent evaluations for derivatives and structured products and is effective from October 1, 2011,” Magnus Cattan, business development director, Interactive Data Asia, told Markets Media.   “Asia Pacific is a very fragmented market with less trading for fixed income which as a result makes price sourcing more challenging.”

Interactive Data is now distributing evaluated pricing for long-term Malaysian fixed income assets from BPA Malaysia. In addition to this, Interactive Data is providing international fixed-income evaluated pricing to the Malaysian market

BPA Malaysia, the only registered bond pricing agency accredited by the Securities Commission of Malaysia, has progressively built its core business to become the principal source of valuation and reference data on the Malaysian sukuk and bond markets.

“We have seen an increasing need from the Malaysian market for independent evaluated pricing, especially for hard-to-value international securities, as domestic firms seek to manage their risk exposure,” said Cattan.  “Demand for this content is increasing internationally due to the rapid growth of Islamic finance over the past few years, which has been estimated at a rate of 15 to 20 percent.”

Interactive Data provides daily evaluated pricing for approximately 2.8 million fixed income and international equity issues, covering a broad range of instruments that include global asset-backed securities (ABS), mortgage-backed securities (MBS) and collateralized mortgage obligations (CMOs).

Evaluated security pricing services provide computer-driven or manually calculated prices for illiquid and OTC securities.