Back Office & Operations

Managers need accurate OTC derivative valuations, says consultant


Transactions in the over-the-counter derivatives market have grown significantly over the last decade with more UCITS hedge funds and traditional asset managers using financial instrument.

Asset managers using OTC derivatives within the UCITS fund structure must source independent valuations in order to meet the demands of regulators.

Paul Compton from SunGard

Paul Compton, head of product management for alternatives at IT specialists SunGard, says the subject of valuations has been the centre of much discussion since the financial crisis and particularly in the wake of the collapse of Lehman Brothers.

He says: “Complex and highly structured OTC derivatives and hard-to-value assets were at the route of much of the ensuing uncertainty that followed the collapse.

“The lack of counterparty risk management left