Not sure just what those derivatives positions are worth? Nothappy about the time it takes to figure it out? A new Web-basedproduct that provides valuations on interest rate, foreign exchangeand commodity positions from financial analytics provider FINCADand interdealer broker ICAP, aims to help.

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Bob Park, the president and CEO of FINCAD, says FairValueInsight lets treasurers and finance departments avoid the possibleconflicts of interest of getting prices on their derivativepositions from their counterparties. It also provides a moretransparent and auditable process than doing valuations on aspreadsheet, Park says. “Spreadsheet solutions works but they don'tprovide a controlled environment.”

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After the company's positions are loaded, the system providesvaluations, at whatever frequency the company requires, in anauditable format whose calculations and methodologies aredisclosed.

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The ICAP prices that FairValue Insight uses reflect the $2.3trillion worth of financial transactions that ICAP manages eachday. Lawrence Leuzzi, managing director of ICAP InformationServices, notes that companies that use a pricing service can alsofeed those prices into FairValue Insight, so that they have twosets of prices.

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Park says the cost of employing FairValue Insight involves “ausage-based model with a relatively modest minimum,” adding that heexpects the platform to appeal to companies with as few as five or10 hedge transactions as well as those with hundreds or thousandsof positions. He envisions the platform as the primary source ofvaluations for some customers and as a check on counterpartypricing for others.

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FairValue Insight can also help deal with the increasingregulatory focus on derivatives positions, Leuzzi says. “Not onlydo the regulators want to see the price that is carried on thebooks but how that price was derived–the exact calculationprocess,” he says. “An entity then is going to have to do more byway of maintaining an audit trail. Not only regulators but auditorswill want to see that type of detail.”

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