Deloitte Touche Tohmatsu Limited has responded to the International Valuation Standards Council’s (IVSC) Exposure Draft Credit and Debit Valuation Adjustments.

We noted that the objective in the exposure draft concerning fair value measurement of credit risk is not clear. We believe that any guidance that is issued by the IVSC should clearly state the valuation objective and that this objective should be valuation for financial reporting purposes, whilst acknowledging that valuation for other purposes exist and may result in the application of different valuation approaches.

We also are concerned who the primary beneficiary would be. We believe it will be of limited use for large financial institutions. Non-financial institutions could benefit from the educational material on credit risk adjustments, however, we feel the exposure draft is not targeted at them.

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