Valuation
Your challenges
The significant increase in volume and complexity of derivatives instruments conducted regulators to carry out post-crisis reforms to regulate banks, insurance companies and investment funds dealing with such financial instruments. As a result it is crucial to thoroughly understand the risks associated with these instruments. An effective risk management of derivatives instruments must embed a reliable control of the valuation.
In Luxembourg, the strengthening of the legal control environment is materialised by the issues of CSSF Circular 11/512 on risk management for UCITs and CSSF Circular 08/380 on eligible assets for UCITs. These circulars call for an implementation of a “process for accurate and independent assessment of the value of OTC derivatives” and indicate that UCITS must be able to determine, with reasonable accuracy, the “appropriate, transparent and fair valuation of OTC value” for their entire life span. Additionally, the UCITS IV regulatory framework requires adequate valuation arrangements proportionate to the complexity of the instrument.
Forthcoming regulation from the Alternative Investment Fund Managers Directive (“AIFMD”) will also require non UCITs structure to have proper and independent asset valuation process in place. This could be done either internally (subject to safeguards and possible external review) or by an external parties. On both dimension, we can provide you services to support you with these new requirements.
Deloitte valuation services
Deloitte provides companies with a broad range of services to respond to a fast and ever-changing environment:
- Independent valuation
- Compliance with CSSF Circular 11/512 and CSSF Circular 08/380
- Independent cross valuation of financial derivative instruments and structure products
- Review of pricing procedures and valuation models
- Assistance in implementing valuation models
- Assistance in the selection of pricing providers
- Trainings
- Trainings on financial instruments
- Trainings on specific valuation issues
For more information on our valuation service offering click on the titles below:
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