Fair value and mark-to-market relates to the valuation of a financial instrument as measured against the prevailing market conditions at a given date. Companies with financial instruments such as FX forwards, options and interest rate swaps are required to provide a fair value at financial year-end, especially if reporting under IFRS. Positions are also “marked” through the year at key dates such as month-end for management reports. Fair values impact on the credit available to enter new derivatives with counterparties. Fair values can be positive or negative depending on whether the market has moved favourably or not since the date the transaction was entered into.
How Hedgebook helps:
Hedgebook’s daily rate feeds enables users to access independent valuations removing the reliance on banks for provision of fair values. Hedgebook’s rate feeds are sourced from industry benchmark sources.