To revalue (an asset, liability, financial instrument, etc) to the current market price, as distinct from historical cost. Marking to market is an important risk-management procedure in financial sectors such as derivatives, where small price movements can result in large exposures to loss. Marking a portfolio of derivatives to market shows the value of the portfolio and the market risk attached to it, and enables decisions about what hedging strategy should be adopted. It enables traders to react quickly to adjust their positions. The Group of Thirty report recommended that derivatives dealers mark their portfolios to market at least daily. Some accounting practices also require marking to market to represent balance-sheet items at their current, rather than historic, values. See also: Group of Thirty.
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