Determining and reporting the fair value of derivative instruments remains one of the most important issues that both financial and non-financial institutions face on a regular basis. With respect OverTheCounter derivative transactions, this importance was greatly amplified in 2013 with the implementation of IFRS13 accounting principles, which incorporated counterparty risk, as well as other risks and costs, into valuations.

Variance provides its clients with independent IFRS13-compliant valuation reporting of their OTC interest rate, FX, and commodity derivative portfolios. Variance valuation methodologies are based on accepted best market practices, which require the calculation of adjustments to the risk-free valuations collectively known as X-Value Adjustments (XVA). 

At each reporting date, Variance produces for its clients IFRS13 valuations including the Credit Value Adjustment (CVA) and Debt Value Adjustment (DVA) relating to the counterparty risk component. Variance assists its clients in resolving potential disputes that arise when reconciling valuations between counterparties, as required by regulators. Variance accompanies its valuations with a well-documented methodology and a detailed description of the inputs used in the calculations in order to ensure full transparency for auditors.

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