A growing concern among the corporates is the stringent accounting framework that is being imposed by auditors and other regulators. The new accounting rules will be effective by 2011 and companies have to get ready by then to comply with the new regulations. After the latest high profile losses, there is

• Demand from the management and investors to have more disclosures and transparency.
• Need for the companies worldwide to regularly manage their derivative portfolios to report fair market valuations
• Provide exposure management and hedge effectiveness reports.
• Increased reluctance to rely on the counterparty price to value the positions.

Setting up an internal valuation team is not economical as corporates are not very successful in attracting high end quantitative engineers as well as this will require heavy investment in buying third party libraries, market data and other IT setup and implementation. This has prompted most corporates to rely on the specialized third parties for the independent valuations, exposure management and hedge effectiveness reporting.