Practical Law Glossary Item 1-382-3612 (Approx. 2 pages)
Glossary
Mark-to-Market
A method of accounting that determines the current market value of a security, derivatives contract, or other asset on a daily basis, which is designed to reflect the price a willing buyer would pay at that moment for the instrument. Because the valuation is undertaken on a daily (or even intra-day) basis, the value is more accurate than if valued over longer periods of time.
For example, traders record their positions in a security at the end of each trading day at the closing rate or value of the security. In the case of bank loan mutual funds, portfolios are valued using the bid/ask levels reported by secondary traders of broadly syndicated bank loans and complied by mark-to-market services (such as Markit Group Limited).