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IOSCO task force the 'subprime crisis'

  • IOSCO (International Organization of Securities Commissions) (dark gray) Image

12 Nov 2007

The International Organization of Securities Commissions (IOSCO) has formed a dedicated task force on the subprime crisis to review the issues facing securities regulators following the recent events in the global credit markets.

Among other things, the task force will consider valuation of assets and accounting issues, particularly accounting for special purpose entities. Click to download IOSCO Announcement of 'Subprime Task Force' (PDF 53k).

IOSCO Task Force mandate regarding valuation of assets and accounting issues:

Given that investors may have relied on the ratings provided by credit rating agencies as not only an assessment of the probability of default by an entity, but also as an assessment of the product's liquidity, the Task Force will assess whether alternative models of valuation are needed and whether IOSCO should develop valuation principles or best practices in this area.

The Task Force, in order to evaluate potential problems raised by the accounting treatment of structured products, will also consider revisiting last year's the report on special purpose vehicles (SPVs) in order to better analyse the mechanisms whereby SPVs are kept on the balance sheet and the possible implications in terms of risk measurement and information to investors where listed companies are involved.

 

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