EU bank regulators report on valuing instruments in illiquid markets

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19 Jun 2008

The Committee of European Banking Supervisors (CEBS) has published a report on issues relating to the valuation of complex and illiquid financial instruments.

The report puts forward a set of issues that should be addressed by institutions and accounting and auditing standard setters in order to improve the reliability of the values ascribed to these instruments.

The analysis focuses on the following valuation related aspects:

  • challenges for the valuation of complex financial instruments or instruments for which no active markets exist;
  • transparency on valuation practices and methodologies as well as related uncertainty; and
  • auditing of fair value estimates.
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