A method of accounting. Marking to market means that the company's balance sheet shows loans and debt instruments at their fair value, which may be higher or lower than cost. Any profits or losses due to any change in value will go to the profit and loss account or to reserves.
Only certain types of companies can use mark to market to account for any loans and debt instruments. These will mostly be banks, insurance companies and investment funds.
+ mark-to-market | mark to market
USA
A method of accounting that determines the current market value of a security or derivative contract on a daily basis; the current market value being what a willing buyer would pay at that moment. 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. Because the valuation is done on a daily basis, the value is more honest than if valued over longer intervals of time. 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).
Practical Law Dictionary. Glossary of UK, US and international legal terms. www.practicallaw.com. 2010.