According to analysis by the Market, Credit, and Risk Strategies group of Standard and Poorâs, Level 3 assets rose 15.5% from the second quarter. Many of these securities are being reclassified as Level 3 assets as holders cannot rely on stale broker quotes or quotes without the level of price transparency required for financial reporting purposes.
OTC Val addresses these data issues through its transparent valuation process based on proven fair value estimation and model-based techniques, which clients use to satisfy audit and internal risk compliance requirements for securities with no direct market observable prices.
Bob Sangha, managing director at OTC Val, adds "In this environment, market participants are as concerned about the assumptions and data behind a productâs price as the price itself. Our valuation methods enable us to provide the required level of transparency and disclosure. In addition, we employ a variety of reasonableness tests to ensure consistency and accuracy, while utilizing [FAS 157 Level II] observable market inputs where possible. We also follow the recommendations from the IASB Expert Advisory Panelâs recent publication titled Measuring and Disclosing the Fair Value of Financial Instruments in Markets that are No Longer Active."
OTC Val is committed to working with banks, fund administrators, asset managers, and other sell-side and buy-side organizations to address growing market pressures for transparent, accurate, and reliable valuations.