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The report sets out principles that can be used to assess the quality of regulation and industry practices concerning the valuation of collective investment schemes (CIS), thereby ensuring that investors are treated fairly. This consultation report updates and modernises IOSCO’s Principles for CIS Valuation, originally developed in 1999, to take into account subsequent regulatory, industry and market developments. It also clarifies some concepts put forward by IOSCO in its report 'Principles for the Valuation of Hedge Fund Portfolios', such as the entity responsible for establishing a policy governing valuation and the independence of the valuation duty.
Valuation of Collective Investment Schemes
The implementation of comprehensive policies and procedures for valuation of CIS assets is a fundamental principle underpinning this sector. It is critical that a CIS properly value all assets in its portfolio, including those instruments for which market quotations are not readily available. CIS valuations are extremely important because if portfolio securities and assets are incorrectly valued, investors may unfairly pay more for their shares or receive less upon redemption, while remaining investors may also be adversely affected.