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.