Table:
|  | Level 1 | Level 2 | Level 3 | Total |
| --- | --- | --- | --- | --- |
|  | RMB’Million | RMB’Million | RMB’Million | RMB’Million |
| As at 31 December 2019 |  |  |  |  |
| FVPL | 14,766 | 5,091 | 116,079 | 135,936 |
| FVOCI | 74,707 | – | 7,014 | 81,721 |
| OFA | – | 375 | – | 375 |
| Other financial liabilities | – | 523 | 1,873 | 2,396 |
| As at 31 December 2018 |  |  |  |  |
| FVPL | 10,875 | 5,009 | 81,993 | 97,877 |
| FVOCI | 41,578 | – | 1,941 | 43,519 |
| OFA | – | 2,032 | – | 2,032 |
| Other financial liabilities | – | 40 | 4,466 | 4,506 |
Paragraphs:
3.3 Fair value estimation The table below analyses the Group’s financial instruments carried at fair value as at 31 December 2019 by level of the inputs to valuation techniques used to measure fair value. Such inputs are categorised into three levels within a fair value hierarchy as follows:
Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1);
Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2); and
Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3).
The fair value of financial instruments traded in active markets is determined with reference to quoted market prices at the end of the reporting period. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis. These instruments are included in level 1.
The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required for evaluating the fair value of a financial instrument are observable, the instrument is included in level 2.
If one or more of the significant inputs are not based on observable market data, the instrument is included in level 3.
Specific valuation techniques used to value financial instruments mainly include: • Dealer quotes for similar instruments; • The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows based on observable yield curves; and • Other techniques, such as discounted cash flow analysis, are used to determine fair value for financial instruments.
Question:
How is the fair value of financial instruments that are not traded in active markets determined?