End-Of-Day Marking And Sign-Off

Every position in a book needs an official price at the end of the day, the number that determines that day's P&L, feeds into risk limits, and becomes tomorrow's starting point. For a liquid stock this sounds trivial: use the closing print. But a book usually holds positions in things without one obvious closing price, an illiquid bond, an over-the-counter option, a position that didn't trade at all that day, and someone has to decide, defensibly, what number to use. End-of-day marking is that process, and sign-off is the independent check that the marks are reasonable before they're locked in.

Why marking needs a process, not just a trader's opinion

A trader marking their own book has an obvious incentive problem: a mark that's slightly generous makes the day's P&L look better. This is exactly why marking is typically not left entirely to the trader who holds the position, an independent risk or valuation function checks marks against external sources (broker quotes, comparable trades, a model) and has authority to challenge or override one that looks off. This separation exists specifically because self-marked books have historically been where some of the largest concealed losses in trading history built up undetected for months.

What gets checked at sign-off

• Marks on illiquid positions are compared against independent broker quotes or a pricing model, not just the trader's stated level.
• Large day-over-day mark changes get flagged and require an explanation, a legitimate market move, or something that needs investigating.
• P&L is reconciled against the trade blotter and position file, confirming the day's number ties out to actual trading activity, not just a plug.
• Stale positions, ones that haven't been re-marked in a while because nothing traded, get specific attention, since staleness is exactly where marks quietly drift from reality.

What this means in practice

A well-run desk treats end-of-day sign-off as a hard control, not a formality: the day isn't closed, and the next day doesn't start clean, until an independent party has confirmed the marks and the P&L they produce. The discipline is unglamorous, but it's the mechanism that catches a mismarked position, deliberate or accidental, while it's still a same-day question rather than a multi-month one.