About a-team Marketing Services
The knowledge platform for the financial technology industry
The knowledge platform for the financial technology industry

A-Team Insight Blogs

Fed’s Bernanke Champions Mark to Market But Says Illiquid Securities Issue Needs Resolution

Subscribe to our newsletter

Federal Reserve chairman Ben Bernanke has added his voice to the debate about mark to market accounting rules this week. Bernanke is in favour of the controversial accounting rules, which require companies to write down assets every quarter to reflect market value, but cautions that regulators urgently need to deal with the issues surrounding the valuation of illiquid assets.

The Fed chairman believes the rules are good in principle but raised some of his concerns with the House Financial Services Committee earlier this week: “I don’t see a suspension of the whole system as being constructive, because there is a great deal of information in valuing many of these assets. Accounting authorities have a great deal of work to do to try to figure out how to deal with some of these assets, which are not traded in liquid markets.”

Assets that aren’t readily traded due to illiquid markets cause problems for mark to market valuations because there aren’t enough prices available to determine the real value of assets.

Earlier this month, the Financial Accounting Standards Board (FASB) said that it would be revisiting mark to market accounting standards, the American Bankers Association (ABA) has spoken up about some concerns it has about the FASB approach. The association feels that issues underlying the controversial accounting rules are not being taken into account by the FASB, especially with regards to other than temporary impairment (OTTI).

The FASB has launched new projects aimed at improving the measurement and disclosure of fair value estimates in response to calls for more disclosure, as well as recommendations made by the Securities and Exchange Commission in its mark to market accounting study, released last year. However, despite its welcoming of the projects to review and reconcile the process for estimating mark to market values in illiquid markets, the ABA is worried that more should be done.

Subscribe to our newsletter

Related content

WEBINAR

Upcoming Webinar: Best practice approaches to trade surveillance for market abuse

Date: 5 March 2024 Time: 10:00am ET / 3:00pm London / 4:00pm CET Duration: 50 minutes Breaches of market abuse regulation can lead to reputational damage, eye-watering fines and, ultimately, custodial sentences of up to 10 years. Internally, market abuse triggers scrutiny of traders and trading behaviours; externally it can undermine confidence in markets and...

BLOG

Data Strategy is Changing as CDOs Focus on The Business, People and Processes, and Add a Little Magic

Data strategy has evolved over the past 10 years, but not necessarily in step with new data management technologies, not always in line with the business, and sometimes with little regard to return on investment. A recent CDO panel discussion at A-Team Group’s Data Management Summit NYC, discussed these and other issued during a session...

EVENT

TradingTech Summit London

Now in its 13th year the TradingTech Summit London brings together the European trading technology capital markets industry, to explore how trading firms are innovating in today’s cloud and digital based environment to create flexible, scalable trading platforms to support speed to market and business agility.

GUIDE

Regulatory Data Handbook 2023 – Eleventh Edition

Welcome to the eleventh edition of A-Team Group’s Regulatory Data Handbook, a popular publication that covers new regulations in capital markets, tracks regulatory change, and provides advice on the data, data management and implementation requirements of more than 30 regulations across UK, European, US and Asia-Pacific capital markets. This edition of the handbook includes new...