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Version date: 14 January 2016 - onwards

D. Treatment for illiquid positions

1. Prudent valuation guidance

718(c). This section provides banks with guidance on prudent valuation for positions that are accounted for at fair value, whether they are in the trading book or in the banking book. This guidance is especially important for positions without actual market prices or observable inputs to valuation, as well as less liquid positions which raise supervisory concerns about prudent valuation. The valuation guidance set forth below is not intended to require banks to change valuation procedures for financial reporting purposes. Supervisors should assess a bank's valuation procedures for consistency with this guidance. One factor in a supervisor's assessment of whether a bank must take a valuation adjustment for regulatory purposes under paragraphs 718(cx) to 718(cxii) of the Basel II Framework should be the degree of consistency between the bank's valuation procedures and these guidelines.

718(ci). A framework for prudent valuation practices should at a minimum

Comparing proposed amendment...