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PIB 2.4 Guidance

1. This section and related PIB section A2.5 in PIB App2 provide Authorised Firms with Guidance on prudent valuation for positions that are accounted for at fair value, whether they are in the Trading Book or in the Non-Trading Book (also known as the banking book).
2. A framework for prudent valuation practices should at a minimum include adequate systems and controls and valuation methodologies. The DFSA's expectations in this regard are set out in PIB section A2.5PIB App2.
3. The 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 Guidance is not intended to require Authorised Firms to change valuation procedures for financial reporting purposes.
4. The DFSA will assess an Authorised Firm's valuation procedures for consistency with the Guidance. The DFSA may impose a valuation adjustment if there is a material degree of inconsistency between the Authorised Firm's valuation procedures and the Guidance.
Derived from RM111/2012 (Made 15th October 2012). [VER20/12-12]