Thomson Reuters said it is beginning to market a variety of analytical services from BlackRock for valuing and determining the risks of particular bonds
The service, based on models built into Blackrock's Aladdin valuation and risk analysis software, is designed to allow fund firms and other asset managers to perform analyses on complex fixed-income products, such as commercial mortgage-backed securities and other structured instruments. The product name is Thomson Reuters Fixed Income Derived Analytics powered by BlackRock Solutions.
The service will combine pricing data from Thomson Reuters and fixed-income models from BlackRock. The derived analytics will be distributed to asset managers, hedge funds, banks, insurance companies, sovereign wealth funds, corporate treasurers and other users through Thomson Reuters’ DataScope Select and DataScope Onsite online services.
The combination of Thomson Reuters pricing and reference data will be using to compute swings in potential interest-rates, spreads, and yields.
The models will be applied across 1.2 million securities across the Americas, Asia, the Middle East, Africa and Europe. These will include government bonds, agency bonds, corporate bonds, mortgages in the United States and commercial mortgage-backed securities, according to Dennis Kirincich, managing director at BlackRock Solutions.
Aladdin now includes a wide range of interest-rate, credit, mortgage and risk models. They are used by 160 BlackRock clients, who already use Thomson Reuters reference and pricing data.
But BlackRock expects to be able to expand usage, broadly, through this marketing arrangement with Thomson Reuters.
"BlackRock has a limited reach through its BlackRock Solutions business,’’ said Joseph Chalom, managing director and chief operating officer at BlackRock Solutions. “Thomson Reuters has thousands of loyal customers who already receive one or more data or content feeds"' from Thomson Reuters’ Datascope product. "This is allowing us to have a reach we've never had before.''
"For existing (DataScope) customers, it will be as simple as turning a switch,'' said Jayme Fagas, head of evaluated pricing at Thomson Reuters.
Aladdin is the linchpin product that turned BlackRock, founded in 1988, into the world’s largest asset manager.
Two founders, Benett W. Golub and Charles Hallac, built mathematical models that became the basis of Aladdin, in order to accurately value complex fixed-income instruments and invest in them on behalf of clients.
The first product that BlackRock sought to understand was a set of instruments that came to be known as collateralized mortgage obligations.
In 2001, BlackRock made its first installation of Aladdin for a customer that also manages assets: Barclays Global Investors. Eight years later, BlackRock bought Barclays for $15.2 billion in cash and stock. This was the move that earned it the ability to call itself the world's largest asset supervisor, now with $3.6 trillion under management.
Aladdin now includes a wide range of interest-rate, credit, mortgage and risk models. They are used by 160 BlackRock clients, who also use Thomson Reuters reference and pricing data.
As of June 30, the Aladdin® platform was being used by BlackRock and other institutions to analyze and process approximately $12 trillion in assets, liabilities and derivatives.
“The data and analytics are battle-tested and quality controlled,’’ said Chalom. And the cost of building an in-house system that regulators will accept is likely to prove “prohibitive,’’ he said.