Regulatory Alerts2024-12-13
Added · Updated
Supervisory Policy Manual CA-S-10 Financial Instrument Fair Value Practices
The Hong Kong Monetary Authority issues this non-statutory guideline to establish expectations for Authorized Institutions regarding governance, controls, and risk management systems for valuing financial instruments at fair value. The document mandates robust valuation processes, including independent price verification, rigorous validation of methodologies, and the consideration of valuation adjustments to ensure prudence for regulatory capital purposes. It outlines the HKMA's supervisory approach, which includes assessing valuation quality and taking corrective actions such as capital requirements if institutions fail to address deficiencies in their fair valuation practices.
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