CEBS undertook a review of the progress made on issues relating to the valuation of complex and illiquid financial instruments and concludes that there are still more improvements to be made.
CEBS made a review of the progress made on the basis of the measures taken with respect to the issues raised in its June 2008 Report on issues relating to the valuation of complex and illiquid financial instruments and concludes that there are still more improvements to be made.
The report concludes that the IASB should:
Ø aim to address wider valuation-related issues such as impairment measurement of available-for-sale assets, treatment of Day 1 profits and losses and the determination of the effect of own credit risk and related disclosures.
Ø clarify particular aspects of fair value measurement guidance, and
Ø provide clarifications regarding all aspects of the reclassification of instruments containing embedded derivatives.
As concerns measures taken by institutions, CEBS concludes that
Ø further efforts should be encouraged with respect to banks’ valuation methodologies and processes and regarding wider valuation-related aspects such as impairment measurement and the application of the fair value option, and
Ø progress and improvements have been observed in the classification of complex and illiquid financial instruments and, more generally, for issues relating to the process of making investment and business decisions as well as risk management;
CEBS continues to monitor the areas of transparency and disclosure, and on auditing fair values.
© CEBS - Committee of European Banking Supervisors
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