How does SQX help with Alternative Investment Pricing?
The Wild West of Financial Securities
REITs. DPPs. Liquidating Trusts. LPs. LLCs. Private Equities. Unregistered Securities. And so many more.
If you need data on alternative investments, you know that the alts world can be a jungle. Some securities are publicly issued, some aren’t (frequently, both types are held by the same sponsor). Plus, the securities themselves aren’t static. Name changes are common. Merges, liquidations, closures, conversions… There are many ways a security can change.
Keeping accurate records is a challenging job. It’s even more challenging when you factor in the high-stakes task of monitoring FINRA 2231(c) compliance. Maintaining current pricing data can be just as difficult. While most alternative investments provide fresh per-share valuations annually, many update quarterly or monthly. A few even update daily. SEC filings don’t always reflect the most recent price, and privately-issued securities simply aren’t available unless you reach out to issuers and sponsors individually. Maintaining fresh information is difficult and technical—and it’s easy to make mistakes.
A Challenging Task – A Simple Solution
If you’re a custodian, trying to maintain an accurate alternative investments file can be a nightmare. Most pricing teams hate the work necessary to maintain updated information. It’s time-consuming, tedious, exhausting, and always distracts from more important tasks.
SQX exists to offer a solution. We provide custodians with updated pricing and reference data for all their alts prices—even the most hard-to-price securities. We give our alts clients a single consolidated file, which includes current prices for all their securities. Oftentimes, this is exactly what custodians need.
Common Problems with Alts Files
A frequent situation that we encounter with our alternative investments clients is that their records have become disorganized. We’ve seen many different issues. Duplicate securities are common—usually caused by name changes. A security’s new name is added to the list, but the old name is never removed. When securities are renamed multiple times, it’s very difficult to keep everything straight. We’ve seen as many as seven instances of the same security in the same file.
We commonly see defunct securities—securities that have been closed, liquidated, merged, converted, or that are in default. Sometimes our clients’ files include securities that haven’t been active for over a decade. Severely outdated prices are another frequent problem, even for securities that are still active.
Every once in a while, we see worrisome securities, such as SEC-busted Ponzi schemes. Occasionally, clients’ alts files include incorrect FINRA 2231(c) compliance info. The stakes are high—incorrect compliance information can be costly.
An Alternative Approach
If you’re a custodian who prices alternative investments in-house, SQX is here to be a resource for you. Whether your alts file is just a little dusty or in complete disarray, we’re the perfect company to get your records in tip-top shape. We’ll give you everything you need to help your alts process run smoother than ever before.
We provide all your alts prices in a single file, delivered via SFTP or API. Whether you need updates daily, weekly, or end-of-month, we’ll deliver you an updated file on your terms. SQX is able to cover the full universe of alternative investments—including privately-issued securities. What’s more, because SQX receives prices directly from issuers and sponsors, we’re usually able to offer fresh prices as soon as the updated valuation becomes available—sometimes up to three months before they’re filed with the SEC!
When you’ve partnered with SQX, you can always be confident about the alts information you receive. We carefully document the price source, the pricing date, the statement date, the date we obtained the price, and the pricing frequency. If you need more information, you don’t need to worry. SQX is completely transparent, and we’re always willing to share our meticulous audit trail.
One of the most useful services we provide to alternative investments custodians is issuer-quoted information related to FINRA 2231(c). For each relevant security, SQX shares issuer-provided information related to FINRA 2231(c), including Publicly-Issued Non-Traded REIT or DPP? (Y/N) and whether the security is (i) based on valuations of the assets and liabilities of the DPP or REIT performed at least annually, by, or with the material assistance or confirmation of, a third-party valuation expert or service; and (ii) derived from a methodology that conforms to standard industry practice. To avoid any confusion, we also provide explanatory notes and keep a detailed audit trail. If there’s a noteworthy situation—like if a security is subject to the 1940 Act, or an issuer shares a special circumstance—you’ll be able to read all the details for yourself.
The SQX Difference
Perhaps best of all, working with SQX means working with a friendly, responsive company that always puts your needs first. If you have a question for us at any point in the process, we’ll answer it within a single business day. We know that your business relies on timely, accurate information, and we’ll make sure that you get what you need to serve your own clients. Our first priority is always serving you.
If you’re an alternative investments custodian, you know how hard it can be to maintain accurate, updated information. Alts pricing is a chore, but we’d love to take it off your hands. With over 20 years of expertise and a team of efficient, dedicated employees, SQX is equipped to revolutionize the way you price alternative investments. When your team’s resources are freed up to pursue more important tasks, you’ll be able to prioritize growth like never before. And it all starts with SQX.
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