Mellon Financial Corporation has introduced an independent, over-the-counter derivative (OTC) valuation service for a range of swaps and options to institutional clients. Mellon will provide these valuations through third-party vendors, at the direction of the institutions in question.
“A changing regulatory climate, along with increasingly tougher risk and compliance requirements, will motivate institutions to seek independent valuations so they do not rely entirely on their investment managers and prime brokers,” says Daniel Wywoda , senior vice president, asset servicing group, Mellon. “The market is moving toward suppliers that can provide independent valuations for a wide range of OTC derivatives besides the two most common, interest rate swaps and credit default swaps. We also can obtain valuations for default basket swaps, total return swaps, currency swaps and inflation swaps, among others,” he adds.
Providing services to support derivatives trading is a strategic area of focus for Mellon. Additional developments planned in this area throughout the next 18 months include enhanced derivatives reporting, transaction processing, and risk and collateral management, according to Wywoda.