Can someone help me out. Any suggestion would be appreciated.Traders in our bank transact Credit Default swap with Asian name Reference assets which are not traded in the market. As a result, for revaluation, the traders' rates are accepted. I know this is a definite "no no" from the control perspective. One way to get around this is to make a provision in the book. But is there any other controls / alternative?

Periodically (monthly?) one should make an effort to get an independent appraisal/valuation of a selected set of these securities. Often one may have friends or relationships with counter-parties that trade similar stuff that get a price on them.

A lot of unpopular stuff is marked against proxies, because it would take far too long to get real quotes for everything. I used to know the Asian CDS market pretty well... our traders benchmarked most Japanese corporates against the Japan CDS quotes they could get for example. So an unpopular name might trade at 1.25x Japan sov spread. If something unusual happened, the guys would just rejigger the spreadsheet formula to adjust the relationship. What this ultimately means is that the basis between the two moves in jumps, and you have to do something with that statistically.Another thing we advertised was using Merton-like models to get credit spreads from traded equity quotes, if they are available. This works well for names with a well-traded equity and are not better than single-A. The really high-grade stuff won't work here, but the proxy approach would be quite good in this case.

if you are willing to name names I could probably be more specific

I've seen a note from Lehman's Structured Credit Research, that it is sometimes possible to check the price of Floaters at Par. But the notes was explaining how to realize arbitrages between both.

par floater spread = cds spreadBut you won't find a lot of pure par floaters in the market.

I dont think the par spread = CDS spread.Thats the practical aspect of what I have observed in the market.Factors such as liquidity effect the differential.If you need to get these spreads priced it might be worth contacting Markit Totem.