Intraday Evaluated Bond Pricing Gives Insight to OTC Bonds

Trading activity on the regulated exchanges is insufficient to provide the marketplace with quality, representative real-time pricing for fixed income instruments. In addition, there has been a significant reduction in bond liquidity since the credit crisis, as banks look to reduce their inventories of fixed income products. The lack of inventory and liquidity means that the buy-side has found it more difficult to locate fixed income assets and trust the indicative pricing that is being offered by banks and OTC venues. 

Related: Interactive Data's Continuous Evaluated Pricing and Liquidity Indicators Services Now Available to FactSet Clients

Coupled with post-crisis budgetary concerns and regulatory oversight of best execution, market conditions have created a number of challenges for buy-side organizations interested in locating, analyzing, and trading fixed income instruments.

To combat these challenges, FactSet has extended its partnership with Interactive Data to integrate IDC Continuous Evaluated Bond Pricing (CEP) service. With IDC’s CEP service, FactSet users will be able to react more quickly to higher levels of market volatility.  

The release will improve price discovery of OTC instruments, giving wealth managers confidence when quoting indicative prices to clients prior to making a trade on the client’s behalf. In addition, wealth and institutional investment managers will benefit from the ability to analyze “over-the-counter” fixed income instruments within the context of multi-asset class portfolios on an intraday basis. And credit analysts will gain greater transparency into the current value of the bonds in their research coverage lists.