Dow Jones Indexes plans to set up an advisory committee and is designing a method for valuing the index in the coming weeks. Lars Hamich, executive director in Frankfurt, said Dow Jones is drawing up a list of rules for questionable events. The committee will advise Dow Jones when one of these events crop up, for example if there is a possible restructuring credit event on one of the credits in the index. The committee, however, will only have an advisory roll, noted Hamich. "In the end, the decision is ours," he explained.
Hamich said the committee will be drawn from a variety of participants, such as dealers and rating agencies. It should be up and running in February, he added. It is crucial that the committee is set up by the end of February because it will advise on the next roll out of the TRAC-X index in March.
The calculation method will give independent prices for the indices, using similar methodology to the International Swaps and Derivatives Association fix rate in the interest rate swaps market. Hamich said it has not yet finalized the method for working this out, but it expects to start publishing prices before the end of the month.
