Auditable valuations challenge administrators

How are administrators valuing instruments and what are the problems they face? Will the increase in illiquid instruments be a major factor only in the short- to medium-term or will it have a longer-term impact for future valuation?

Valuation of instruments is a major issue for fund administrators. In the wake of the problems posed by subprime, complex and often illiquid financial instruments will continue to be a challenge for administrators.

Don McClean at UBS Ireland believes the independence of valuations "is critical including for difficult-to-price instruments." He says the increase in illiquid investment is "creating a demand for specialist pricing vendors. Vendors are developing solutions so these illiquid