Q&A with Stephanie Sparvero: The role of transparent evaluated pricing

Bloomberg’s Stephanie Sparvero, Global Head of BVAL (Evaluated Pricing) at Bloomberg, sat down with the International Valuation Standards Council (IVSC) to share her perspective on the importance of transparent evaluated pricing and how the International Valuation Standards can help address valuation challenges.

How has your career led you to the role you have today as the global head of Bloomberg’s evaluated pricing service?

I’ve always been a very numerical, analytic person so I decided to pursue my first degree in engineering at MIT followed by an MBA degree in finance at Columbia. Out of college, I served as an analyst at Arthur Andersen (now Accenture) where I learned the exciting art of modeling for the investment side.

When an opportunity came up to be the sixth employee at C-BASS, a fledgling hedge fund in the mortgage space, I leapt at chance to build something new at a smaller shop and spent 10 years with the firm developing my financial skills, including getting an MBA in finance, which helped me to go from being an analyst to a portfolio manager. Over time, I realised I was more interested in optimising execution rather than generating investment ideas, so took a role as the Global Head of Structured Finance Analysts at Markit then later went on to be the COO of Barclays’ Securitized Product Trading business.

In 2016, Bloomberg approached me for a BVAL position, and I remember being very excited since I love fixed income, thinking about what goes into pricing and helping to inform such a massive, impactful market. I started off as the Chief Operating Officer of BVAL, then three years later, I took on the role of leading BVAL. It’s been a fascinating, fast-paced six years helping to shape BVAL into what it is today.

Could you tell us a bit more about BVAL and give us a sense of the breadth and frequency of the data points used across the offering?

When it comes to making pricing decisions, transparency is critical. BVAL is Bloomberg’s award-winning evaluated pricing service, which uses over 5 billion pieces of data every day to supply independent evaluated daily pricing for over 2.8 million fixed income securities. BVAL does this for all asset classes across the liquidity spectrum, including thinly traded and hard-to-price instruments.

From a standardization perspective, what is critical for delivering this service and how do you think International Valuation Standards (IVS) can help with these challenges?

BVAL has become a mainstream institutional service because of its unrivaled transparency. Clients can understand what inputs we are using, what methodology is applied to those inputs, and the resulting outputs. Bloomberg valuations are supported by the ‘BVAL Score’, a proprietary measure showing the relative amount and consistency of market data used to generate each evaluated price. Fundamentally, we offer a standardized, clear pricing process. This enables clients to make—and explain—their decision on what works best within their organizations.

I see IVS working toward a similar outcome for market participants, in that we want to outline standard valuation processes that can be readily utilized by firms of varying size and complexity. Their primary objective is to build confidence and public trust in valuation by producing standards and securing their universal adoption.

To arrive at this trust, valuation transparency is the driving force behind the International Valuation Standards Council, and something where pricing services play an important role. The hope is that by breaking down the processes and roles, firms will be able to better identify and understand any gaps in their current approaches and ensure that ownership throughout the process – whether internal or by third parties – can be adequately distributed and governed. Data providers, accountants, valuers and other experts can all benefit from meeting the IVS in their work because this will raise the quality of valuations across the industry, and that benefits all of us.

What are your expectations for the next year, both from a market and BVAL perspective?

The biggest constant in this market is change. As for market influences in 2023, we will likely still be contending with volatility for a while stemming from inflation concerns, geo-political risks, and potentially more central bank moves to end this long period of low rates. As our clients manage risks and make decisions against a backdrop of uncertainty, our goal is to support them by building upon our strengths to develop new and enhanced pricing services as markets evolve. Our clients know they can rely on us for stability in volatile and changing environments. Mike Bloomberg founded our company in 1981 to increase transparency in the bond markets. We believe transparency makes markets work better and we are always looking for ways to increase it.

This article was first published on IVSC.org. To read the full interview please visit here.