Feedback On Pricing Irregularities Wanted

Tyler Durden's picture

Zero Hedge has received some troubling info (like there isn't enough) regarding major pricing discrepancies between certain securities pricing services. The services include companies such as IDC, Advantage Data, Markit and others. While I will not disclose which one may be a culprit, the allegation is that one (or more) are providing substantially above market pricing levels, specifically as pertains to distressed securities.

It is immediately obvious why that is a huge issue - while congress and Najaf the hot dog vendor scream about Mark To Market treatment, pricing databases already take matters into their hands. Since it is mostly broker dealers who use these services (as opposed to hedge funds who use trader runs and end of month quotes from B/Ds and prime brokers), taking a BBB RMBS tranche, pricing it 10% above prevailing mid levels and having a Goldman Sachs (for example) use this as their mark on several hundred billion of toxic assets would inflate asset levels immediately, with no need for any MTM resolution at all, and making all the clamoring about MTM yet another straw man for public consumption.

Zero Hedge welcomes the feedback from any of our readers who are knowledgeable in this matter.