Reval Offers a Subscription-Based Outsourcing Service, Reval Center

Reval Offers a Subscription-Based Outsourcing Service, Reval Center
16.10.2013 01:00 am

Reval Offers a Subscription-Based Outsourcing Service, Reval Center

Risk Management

With financial year-end fast approaching for many companies, financial professionals may want to outsource the valuations of their derivatives to mitigate non-compliance with International Financial Reporting Standard, IFRS 13, which came into effect at the beginning of this year, says Reval, a global Software-as-a-Service (SaaS) provider of Treasury and Risk Management (TRM) solutions.  In a recent Reval poll of European financial professionals, only 14 percent said that they are confident they will meet compliance with the new requirements, and 86 percent said they are still struggling to understand the standard or are unsure of how to implement it. IFRS 13 changed the definition of fair value and how it is to be calculated. Under the new standard, a counterparty’s credit risk, or Credit Value Adjustment (CVA), must be taken into account when valuing derivatives, and an entity’s own credit risk, or Debt Value Adjustment (DVA), must be accounted for as well. "Application of credit adjustment introduces noise to the hedge structure, potentially leading to hedge ineffectiveness,” explains Günther Peer, Regional Vice President of Solution Consulting, EMEA at Reval. "As CVA and DVA calculations are complex, and the preferred approach should be coordinated with the corporate´s auditor or advisory firm before implementing, outsourcing to a reliable partner is probably a viable option to assure compliance at year end."  Reval offers a subscription-based outsourcing service, Reval Center™, which provides derivative and financial instrument valuation, hedge accounting and compliance reporting on behalf its clients. Reval’s in-house experts use the SaaS TRM solution to manage the processing and provide periodic reporting. Forty-four percent of financial professionals polled also reported that they intend to use spreadsheets for their calculations. “Calculating CVA and DVA with spreadsheets will be very challenging this close to year-end,” says Peer. “As fair values have to be determined on an ongoing basis, outsourcing is a more efficient and reliable choice, considering the additional time spent on a monthly basis and the operational risk of relying on spreadsheets.” 

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