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BDA:
BDA:
Please tell us a little about your background and how the fixed income data business has evolved since you’ve been at Bloomberg.
Stephanie Sparvero:
Stephanie Sparvero:
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. Prior to joining Bloomberg, I spent over 20 years focused on securitization, specializing in mortgages on the buy side and sell side. I’ve been with Bloomberg since 2016, first as Chief Operating Officer of BVAL, Bloomberg’s evaluated pricing business, then as the product’s Global Head of Markets Research and Analysis, and since 2019, I have led BVAL’s business globally.
Over the course of my time at Bloomberg, client’s view on the role of data and technology has evolved. Today, companies see data and technology as central to delivering results, augmenting their markets expertise, and building broader, impactful industry relationships. This is underscored by it now being very common for our clients to make large strategic investments in technology and to have dedicated quantitative staff, as well as technically trained individuals in trading and investment functions with data science skills. I think this is an important development because approaching data and technology as a driver of innovation rather than a cost, is likely to differentiate market participants for some time to come.
BDA:
BDA:
How did the challenges of COVID and remote work impact BVAL in 2020 and 2021?
SS:
SS:
BVAL has a highly collaborative culture across our product, evaluator, engineering, and quantitative teams. Fortunately, even before COVID, Bloomberg had excellent tools for sustaining that collaboration when everyone was sent home in March 2020.
There’s a great book that has stuck with me called Only the Paranoid Survive, and one of the central concepts is your ability to prepare for a strategic inflection point in your business, colloquially called a “10X” event. I was relatively new in my role heading up BVAL when COVID happened and was maybe at the point where I could personally manage a “5X” event.
The volatility and operational management from March to July of 2020 by any metric was in excess of a “10X” event, so we all had to step up. It became a real opportunity to test the strength of a workflow automation strategy we had been developing prior to the pandemic so we could deliver price challenge information at a much larger scale for clients. By mid-2020, we were able to proactively improve the client experience while investing in longer-term product enhancements.
I also can’t emphasize enough how essential our client’s feedback was for testing ideas and following the market during the past two years. We consider our clients to be our trusted partners in development, and we leverage information about their needs in our design process and use their feedback for improving our quality. Our goal is to provide consistency, but also to consistently evolve BVAL to meet client needs.
BDA:
BDA:
Can you talk a little about how demand for fixed income data has evolved over the past few years?
SS:
SS:
I see firms placing greater weight on data and technology and investing in a more technical workforce as a direct response to market changes. Fixed income markets have evolved dramatically in the last few decades with the introduction of streaming quotes, ETFs, electronic trading, and ever-increasing compliance and regulatory requirements. These trends have led to an environment of shrinking margins and a move toward electronification, which means fixed income investors require more and more data to keep up. The most successful market participants are those able to effectively manage their resources and do more with less—which is possible with the aid of technology and data science. In our role as pricing providers, we are focused on helping our clients analyze and utilize pricing data more effectively and efficiently as data consumption increases.
BDA:
BDA:
Federal regulators continue to push for more bond market transparency. How has this shaped BVAL’s business and its relationship with clients - both sell and buy side?
SS:
SS:
As the need for all parts of an organization to understand the price given, grows – in part due to regulations – BVAL’s focus on transparency continues to be very valuable for our clients. For example, BVAL details and explains the valuation process and provides insight into its data inputs and algorithmic methodologies so clients can understand and justify how valuations are derived.
Our aim is to remain close with clients to help them navigate new regulations that range from changes to quoting in the market to benchmarking pricing provider quality while producing prices that clients can depend on, however they are using them.
BDA:
BDA:
The Bond Dealers of America just formed a Division for Fixed Income Pricing and Valuations, of which BVAL is a founding member. Can you talk a little about the importance of providing a dedicated platform for this group to focus on advocacy, education, information sharing?
SS:
SS:
I am passionate about fixed income, and believe it is fundamental to a functioning economy both domestically and globally. Despite fixed income’s essential role, it is not well understood outside of those who are working in it. This has been the case since its inception likely because it’s primarily geared towards institutional investors versus retail investors.
Most Americans know about the stock market and have opinions about it, but I would say less attention is spent thinking about the fixed income market, which is just as big, on the order of $50 trillion outstanding. I think Americans should know about any part of the economy this large and which offers an equally important avenue for individuals, companies, governments, and financial institutions to pursue financial growth opportunities.
As I mentioned earlier, the fixed income markets have undergone significant changes especially as it relates to electronification. One aspect of this is that ETFs and portfolio trading have become more common, transforming the market further, especially in the corporate sector. Recognizing and reacting to these shifts can have a sizable impact on companies and individuals. Additionally, the municipal market has had extensive growth in taxable bonds, potentially affecting individuals either through their home governments or their personal investments. And it goes without saying that housing and mortgage availability is a top concern over the past two years, as people migrate for job opportunities and lifestyle considerations.
I see a real opportunity with the Bond Dealers of America’s new Division to increase understanding and awareness about this complex yet crucial part of our economy.
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