Net liquidating value
It is higher than the OLV because it assumes that a transaction would occur willingly between the buyer and seller, without the seller being obligated to transact.It also assumes that sufficient (rather than reasonable) time would be allowed to find all buyers available.T initial margin requirements go into effect ( ET) are subject to position liquidations to ensure margin compliance.Definition and meaning of Liquidation Value Liquidation value can be defined as the estimated amount of money that could be received quickly through the sale of an asset or a company.It is also not used to determine whether commodities accounts are margin compliant.
Specifically, the rules allow a FCM to calculate the "secured" amount according to one of two methods: A. Here is a selection from the April 24th Report from the MF Global Trustee to the Senate Banking Committee (available here): Under current rules, FCMs are not required to calculate "secured" amounts for customer funds held for trading on foreign exchanges per Commodities Futures Trading Commission Rule 30.7 ("30.7 funds") the same way that they must calculate "segregated" amounts for customer funds held for trading on U. exchanges per section 4d of the Commodity Exchange Act ("4d funds").If FCMs were required to compute the secured amount under the Net Liquidating Equity Method, it could help ensure that all customer funds are properly segregated at all times and eliminate a difference in treatment among customers of which most customers are unaware. Buyers will often engage an appraiser to provide an opinion on the value of tangible assets acquired.They do this to justify the net tangible asset backing for the purchase price and hopefully reduce the amount of goodwill being paid.
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The orderly liquidation value (OLV) is typically included in an appraisal of hard tangible assets (i.e., equipment).