Corporate determination of fair value has reached a critical juncture that will require international firms to assess and reform their approaches. Regulatory scrutiny of how financial institutions validate the price of assets held in a fund has never been more stringent. This is a necessary symptom of multiple fast-evolving factors, such as the increasing complexity of financial instruments, globalised markets, economic changes and geopolitical events, which create a greater need for standardisation.
As is often the case when regulators look to strengthen oversight of a particular market practice, the initial result tends to be heightened monitoring and reporting requirements for firms as different market authorities implement their own unique regimes and obligations.