rec_44

(44) In order to reflect the actual value of assets, the use of mark-to-market should be the preferred method of valuation. The manager of an MMF should not be allowed to use mark-to-model when mark-to-market provides a reliable value of the asset, as mark-to-model is prone to providing less accurate valuation. Assets such as treasury and local authority bills, medium- or short-term notes are generally the ones that are expected to have a reliable mark-to-market value. For valuing commercial papers or certificates of deposit, the manager of an MMF should check if accurate pricing is provided by a secondary market. The buy-back price offered by the issuer is also considered to represent a good estimate of the value of the commercial paper. Some assets can be inherently difficult to value based on market prices, for example some OTC derivatives which are thinly traded. Where that is the case and where mark-to-market does not provide a reliable value of the assets, the manager of an MMF should assign a fair value to the asset by using mark-to-model, for example the manager of an MMF should use market data such as yields on comparable issues and comparable issuers or by discounting the asset's cash-flows. Mark-to-model uses financial models to allocate a fair value to an asset. Such models can, for example, be developed by the MMF itself, or the MMF can use existing models from external parties such as data vendors.

← rec_43 · All articles · rec_45 →

Source: EUR-Lex (Cellar) · retrieved 2026-10-30 · Text as adopted (Official Journal); later amendments are not incorporated in this text.