Daily Mid-Market Valuations
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DerivActiv provides daily mid-market valuations and ASC 820 Fair Values for financial assets and derivatives including bonds, Mortgage-backed Securities (MBSs), interest rate swaps, foreign currency transactions, equity swaps and other derivative instruments. These values can be used to meet ASC 820 Fair Value and GASB standards, identify trends, and spot potential opportunities or risks.
Mark-to-Market ValuationMark-to-market is an accounting methodology of assigning a value to a position held in a financial instrument based on the current market price for the instrument or similar instruments. For example, the final value of an interest rate swap that expires in 30 years will not be known until it expires. If it is marked-to-market, for accounting purposes it is assigned the value a counterparty is willing to transact at the open market currently.
Mid-market valuations are values of transactions based on the mid-point between the bid and the offer. Mid-market values are not used in financial statements since the introduction of FAS 157 in 2008. Mid-market values are useful in determining a starting point for further analysis.
ASC 820 and Mark-to-Market ValuationRelated to mark-to-market valuation is the effect of the issuance of ASC 820 and its definition of fair value. ASC 820 defines fair value as: “The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date."
Under ASC 820 (previously FAS 157), the asset or liability is equal to the exit price, not necessarily the value on the mark-to-market statement from the financial institution providing the statement. DerivActiv adjusts periodic mark-to-market values to incorporate nonperformance risk as required under ASC 820. |
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