Creation of a rating service
L'AGEFI: Thursday, November 22nd 2012
CFINANCIALS. The new service will be available on a dedicated site
cfinancials, company founded in 2009 in Lutry by Michael Heijmeijer and currently headquartered in Rolle, has notched up multiple successes. Its financial database covers more than 10 product types and 99% of all financial products in one standard platform is sourced from Thomson Reuters, Six Telekurs, Interactive Data and Dow Jones (in addition to several issuers/asset managers who provide direct feeds to cfinancials), is without a doubt the largest among those with free and open access and boasts a search engine unmatched to this day. Several financial institutions and asset managers use the data gathered by cfinancials on their own site (“white labeling”). According to an article in Finanz & Wirtschaft, one of the private banks using this solution even decided to no longer display a fund family of a well-known asset manager as they were not willing to meet the required level of transparency. This is a concrete example of how cfinancials is contributing to improved transparency in the finance sector.
The founder, Michael Heijmeijer, doesn’t deny that the free open access search hasn’t evolved much the last few months. However, this is not at all the case for paid services, to which he has dedicated the bulk of cfinancials’ development efforts:
We are concentrating on what generates revenues.”The next major project for cfinancials: a risk indicator expressed as a simple percent from 0 to 100, with 100 being the highest risk. The rating is applicable to the full universe of financial products based on real time pricing elements and modern media input (vs data provided by the issuer). This risk rating, expected to be their flagship product, will compare the risk of total loss across all financial products, whatever their type. At the time of listing, in the absence of market data, the stock is evaluated at 50%.
Ratings for the components of the Euro Stoxx 50 will soon be available through open access while others will be accessible through a subscription plan. The algorithms are comprised of several criteria: the movements of the stock itself, its behavior compared to its peers, its volatility and its liquidity. The liquidity includes three dimensions: frequency of trading, volume traded as well as differences between asking and offering prices. Also included in the analysis is the impact of news from modern media, including from blogs and Twitter. The approach is essentially quantitative and does not take into account of market movements so as to focus on the risks linked directly to the company. It highlights interactions between the evolution of the stock market as well as the bond market.
While the rating itself is quite simple, cfinancials also offers other ways to view and stay abreast of news related to products. For example, in the case of a structured product with several underlyings, a quick view of the risks of each one of those underlyings, as well as those linked to the issuer, can be easily obtained. Additionally, the investor can personalize threshold alerts for the risk levels for each of the underlyings. The rating’s simplicity supports the concept of transparency—cfinancials' rally cry since its inception.