Implementing fair value (mark to market) for investment portfolio instruments in the Dominican Republic: opportunities and challenges for the Dominican financial sector

What it is about

Yamileh García, a panelist on the mark-to-market panel at the Third Annual Risk Conference (September 19, 2025), presented the opportunities and challenges of valuing investment portfolios at market in the Dominican Republic.

The 9 slides explain why IFRS 9 suggests classifying portfolios according to their business model, recall that mark to market has not always had consensus (the 2008 financial crisis and the pandemic), analyze local market conditions (rigidities in price formation, limited liquidity and differences between price sources), estimate the effect of market valuation on institutional portfolios' results and close with reflections.

Objectives

• Explain the value of mark to market for risk management, transparency and investment management.
• Describe the local market conditions that complicate market valuation.
• Set out what is needed for valuation to be reliable.

Key takeaways

1. Market valuation helps track exposure to price, liquidity and credit risks, and reflect the impact of market conditions on the manager's performance.
2. There has not always been consensus: in the 2008 financial crisis, valuing at market when liquidity is lacking was questioned, and the OECD noted during the pandemic that fair value principles must be flexible under exceptional circumstances.
3. The local market has rigidities in price formation, limited liquidity and differences between price sources, which generates higher relative volatility of returns.
4. The growth of institutional portfolios, combined with duration positions, exposes the system to market price fluctuations.
5. Among the final reflections: be comfortable with price sources, promote market convergence and depth, and develop hedging and cushioning mechanisms; mark to market is not just an accounting concept but a management tool.