Core Viewpoint - The article discusses the evolving trends in the pricing services sector, focusing on the impact of artificial intelligence (AI), the democratization of private and loan markets, and new governance participation models in the financial industry [2][5]. Group 1: AI in Pricing - AI has significant potential in optimizing existing pricing models, gradually providing more accurate pricing over time [4]. - Concerns were raised about the risks associated with AI in pricing, including unknown data issues and model flaws that could lead to pricing inaccuracies, affecting regulatory capital, portfolio valuations, and risk management decisions [4]. - Some participants reported successful applications of AI in administrative and operational tasks, such as generating standardized vendor responses [4]. Group 2: Democratization of Private Markets - The trend of democratizing private and loan markets is gaining momentum, with retail investors now able to directly invest in private and loan markets, exemplified by the growth of AAA-rated collateralized loan obligation (CLO) exchange-traded funds (ETFs) [5][6]. - The precise pricing of private market assets remains challenging, and regulatory scrutiny is increasing regarding pricing practices and their impact on investors [6]. - The article highlights the volatility in the collateralized loan obligation market, particularly during the global trade war, which affected the pricing accuracy of loans and CLOs [6]. Group 3: Governance Participation - The SEC's 2A-5 rule has led to an increase in non-board valuation committees among investment advisors, which are now more frequently engaging with pricing service providers [7]. - These committees regularly communicate with pricing vendors to analyze discrepancies in pricing and ensure compliance with internal requirements [7]. - Companies are encouraged to review the effectiveness of their pricing controls during periods of market volatility, including assessing the performance of pricing models under stress [7]. Group 4: Collaboration and Future Developments - LSEG is collaborating with global financial firms to enhance cooperation in the pricing services sector, with clients successfully applying pricing data to emerging business scenarios [8]. - A strategic partnership with Dun & Bradstreet aims to expand LSEG's use of private market information, enhancing data accessibility and creating opportunities for new private market data sets [8]. - LSEG is committed to meeting client governance needs, including compliance with the SEC's 2A-5 rule, providing quarterly materials that cover pricing methods and testing results [8].