24. März 2008
New Market Information System
Comes from Hofheim
The problem has long been considered one of the daily downsides to the job for industry insiders. Those active in the market for Floating Rate Notes look in vain for market-driven prices based on actual trading activities. This makes the valuation of stocks and portfolios difficult and turns the task of price finding pursuant to MiFiD into a gamble.
It has long been an open secret that the prices for Floating Rate Notes published by the Deutsche Börse and the international stock exchanges in Madrid, London, Milan, Paris, or Luxemburg are in no way market-driven. And the established securities announcements offered by Telekurs or other price sources do not provide any better orientation. Floaters may be offered on the stock exchange, but the price management is often inadequate or non-existent on account of the low order volume. Therefore, this important product often lives in the shadows in international financial centres.
Traders report: “price deviations of up to 40 cents or more are not uncommon for nearly all price sources. The prices are not only wrong; they are completely implausible.”
Naturally, the market should orient itself around the trading activities in large volumes during the daily price finding in order to depict actual tendencies and publish market-driven prices. Instead, exchange brokers at the stock exchanges use small order transactions for determining the price, thereby dramatically distorting the prices measured against the absolute trading volumes.
The annoyance at the trading desks is great: “No one is interested anymore in discussing whether the published price should be applicable for everything from a small order to a domination of 50,000 euros and the funds thereupon have to value portfolios in the billions with incorrect prices,” remarks Frank Polz, managing director of TASS Wertpapierhandelsbank from Hofheim, the leading bank in the floater market.
In current practice, investors who invest small amounts in floaters must anticipate serious discounts or spreads. The prices for these transactions naturally massively distort the markets and do not depict the actual market level in any way. However, market-driven prices must be used for valuation of the portfolios of funds, not the least because they show the correct market structure to the risk-controlling departments.
The floater market desperately needs a valuation source with market-driven prices if it is to remain credible and to avoid destroying the trust of investors in this defensive and versatile product. If one believes those responsible for the International Floating Rate Notes Exchange (IFEX) from Hofheim/Ts., which is about to start up, this new information system will offer exactly that: prices on the basis of the current buying and selling situation as a mirror of the actual market conditions. “We will offer the market for Floating Rate Notes a real valuation source with market-driven prices,” says Hansjörg Polz, managing director at TASS and initiator of the IFEX.
Initially conceived as purely a price information system, the IFEX, as an independent price source, will publish all €FRN prices on Bloomberg and Reuters in the form of an electronic stock exchange price list. In contrast to all existing systems, IFEX prices are based on actual turnover, actual customer orders, and actual market conditions. The source of the pricing are the actual order activities of approx. 400 banks worldwide that offer an excellent cross-section of the market.
Participation in and use of the IFEX pages is available to all previous and active customers of TASS Wertpapierhandelsbank after activation.
and IFEX01 to IFEX500
On Reuters IFEX (main page)
and Reuters IFEX01 to IFEX500
International Floating Rate Notes Exchange (IFEX) about to Start
New Market Information System
Comes from Hofheim
The problem has long been considered one of the daily downsides to the job for industry insiders. Those active in the market for Floating Rate Notes look in vain for market-driven prices based on actual trading activities. This makes the valuation of stocks and portfolios difficult and turns the task of price finding pursuant to MiFiD into a gamble.
It has long been an open secret that the prices for Floating Rate Notes published by the Deutsche Börse and the international stock exchanges in Madrid, London, Milan, Paris, or Luxemburg are in no way market-driven. And the established securities announcements offered by Telekurs or other price sources do not provide any better orientation. Floaters may be offered on the stock exchange, but the price management is often inadequate or non-existent on account of the low order volume. Therefore, this important product often lives in the shadows in international financial centres.
Traders report: “price deviations of up to 40 cents or more are not uncommon for nearly all price sources. The prices are not only wrong; they are completely implausible.”
Naturally, the market should orient itself around the trading activities in large volumes during the daily price finding in order to depict actual tendencies and publish market-driven prices. Instead, exchange brokers at the stock exchanges use small order transactions for determining the price, thereby dramatically distorting the prices measured against the absolute trading volumes.
The annoyance at the trading desks is great: “No one is interested anymore in discussing whether the published price should be applicable for everything from a small order to a domination of 50,000 euros and the funds thereupon have to value portfolios in the billions with incorrect prices,” remarks Frank Polz, managing director of TASS Wertpapierhandelsbank from Hofheim, the leading bank in the floater market.
In current practice, investors who invest small amounts in floaters must anticipate serious discounts or spreads. The prices for these transactions naturally massively distort the markets and do not depict the actual market level in any way. However, market-driven prices must be used for valuation of the portfolios of funds, not the least because they show the correct market structure to the risk-controlling departments.
The floater market desperately needs a valuation source with market-driven prices if it is to remain credible and to avoid destroying the trust of investors in this defensive and versatile product. If one believes those responsible for the International Floating Rate Notes Exchange (IFEX) from Hofheim/Ts., which is about to start up, this new information system will offer exactly that: prices on the basis of the current buying and selling situation as a mirror of the actual market conditions. “We will offer the market for Floating Rate Notes a real valuation source with market-driven prices,” says Hansjörg Polz, managing director at TASS and initiator of the IFEX.
Initially conceived as purely a price information system, the IFEX, as an independent price source, will publish all €FRN prices on Bloomberg and Reuters in the form of an electronic stock exchange price list. In contrast to all existing systems, IFEX prices are based on actual turnover, actual customer orders, and actual market conditions. The source of the pricing are the actual order activities of approx. 400 banks worldwide that offer an excellent cross-section of the market.
Participation in and use of the IFEX pages is available to all previous and active customers of TASS Wertpapierhandelsbank after activation.
Demo-Screenshots (Popup)
On Bloomberg under IFEX (main page)and IFEX01 to IFEX500
On Reuters IFEX (main page)
and Reuters IFEX01 to IFEX500
