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IVSC publishes exposure draft on valuing financial instruments

  • IVSC (International Valuation Standards Council) (lt green) Image

15 Dec 2020

In December 2018, the International Valuation Standards Council (IVSC) set up a new Financial Instruments Board, tasked with reviewing and improving IVS 500 'Financial Instruments'. The Board has now published a first exposure draft that addresses improvements to IVS 500 regarding governance and data.

On governance, the exposure draft provides guidance on the processes that entities should follow to ensure proper governance around financial instrument valuations. The guidance requires that a valuation process should be systematic, consistently applied, economically sound, and controlled.

The section on data outlines the principles for creating a data taxonomy or dictionary to categorise, assess and control all data that is used in valuations. It also notes specific requirements that need to be met for different types of data. The section also describes the controls necessary for aggregating and managing data in an organisation and how the concept of proportionality applies in determining the requirements concerning the use of data.

The exposure draft on the improvements to IVS 500 will be published in stages. This first draft addresses governance and data while methods and models as well as controls and reporting will be adressed later. As there are interdependencies between the areas, the different versions of the exposure draft will be cumulative. The exposure draft containing the proposals on methods and models as well as controls and reporting will also include the sections included in this first exposure draft to address any interdependencies and facilitate stakeholder comments on the proposals.

Comments on this first exposure draft are requested by 19 April 2021. It is available on the IVSC website.

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