The Hedge Fund Law Report

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By Topic: Fair value

  • From Vol. 2 No.19 (May 13, 2009)

    Basel Committee Issues New Guidelines on Fair Value for Financial Instruments

    On April 15, 2009, the Basel Committee on Banking Supervision, which includes banking regulators from the world’s biggest financial markets, issued a final series of guidelines intended to help banks improve their valuation of complex financial instruments.  The guidelines, which the Committee circulated in draft form last November, aim to help regulatory supervisors assess the soundness of bank valuation practices for the purposes of determining the adequacy of their capital reserve.  Since the overvaluation of complex financial instruments helped trigger the current financial crisis and contribute to the global economic meltdown, the “fair valuation” of complex or illiquid financial instruments has become particularly important.  We provide an in-depth discussion of the Basel Committee’s guidelines.

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