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01 July 2013

IVSC: Consultation on valuation of derivatives


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The IVSC has recognised that the lack of globally-accepted and recognised standards for the valuation of derivatives has led to a lack of trust in the valuations, and has embarked on a project to rectify this. Comments are due by September 30, 2013.


One of the contributory causes of the 2008 financial crisis was that the rapid growth in the complexity of financial products over the previous decade and in the complexity of the models developed to value than had created a situation where senior management, independent directors, investors and regulators had insufficient understanding of the products and processes to determine the appropriate degree of confidence that should be placed on the valuations that were provided.

It has also became apparent that some of the accounting requirements for measuring instruments would have benefited from being informed at the time of their creation by an established source of recognised valuation best practice. In the absence of this many consider that there are mismatches between the way in which the accounting fair value of an instrument has to be determined and the way in which it would be valued by market participants.

The IVSC produces valuation standards and technical guidance with the objective of improving consistency and transparency in valuation, which in turn builds confidence in valuations by those who rely on them. This proposed Technical Information Paper is the first of a planned series of papers designed to bring greater consistency and transparency to the valuation of derivatives based on different asset classes, ie fixed income, credit, foreign exchange, commodities and hybrid products.

This ED has been produced in order to invite input and comments from valuation specialists, investors, analysts, auditors and anyone else who needs to produce or rely on valuations of equity instruments.

Press release

Exposure draft



© IVSC - The International Valuation Standards Council


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