Bolsas y Mercados Españoles (BME) has created Fair Value Compliance, a fixed income valuation service designed to facilitate, on a daily basis, compliance with the periodical disclosure requirements of the Spanish Financial Supervisory bodies: the CNMV, the Bank of Spain and the Insurance General Directorate.
Since the 31st of December 2008, when the CNMV’s circulars 3/2008, 7/2008 and 11/2008 came into force, all Investment Firms, Collective Investment Managing Institutions, Venture Capital Managing Institutions and Collective Investment Institutions that operate in Spain, have been required to apply the Fair Value criteria in their asset valuation processes. These circulars are the latest regulations of a set of rules extending the obligation to use the Fair Value criteria to all institutions that make up the Spanish financial system. The application of the Fair Value criteria in the valuation of fixed income assets can entail some difficulties, such as the search for prices of comparable assets, the choice of the appropriate valuation methodology or the treatment of options embedded in certain bonds.
According to Santiago Ximénez, General Manager of Market Data, the BME subsidiary that has developed the service, “BME obtains the Fair Value of the Spanish fixed income instruments through a process that complies with the requirements of the Spanish financial supervisors”, and he adds that “Fair Value Compliance is BME’s answer to those institutions that deal with the technical challenges posed by today’s regulations on valuation”.
Fair Value Compliance has been audited by the compliance department of a leading independent audit company.
For more information, visit www.fairvalue.es