Net Asset Value (NAV) reporting updates, including methodology adjustments and disclosure requirements.
Monthly Updates
Last Updated: 31/03/2025
| Sub Category | Region | Earliest Adoption Date (Can Apply) | Latest Adoption Date (Must Apply) | Update Title | Short Description | Details | FA Product Impact | Status | FA Outreach | Source Link |
|---|---|---|---|---|---|---|---|---|---|---|
| NAV | Luxembourg | Jan 1 2025 | Jan 1 2025 | CSSF Circular 24/856 | Investor protection in the event of NAV calculation error and non-compliance with investment rules | Circular 24/856 imposes new requirements in the event of NAV errors and non-compliance with investment rules in order to increase investor protection and public confidence in the industry. All regulated fund structures are in scope i.e. UCITS, Part II Funds, SIFs or SICARs as well as MMFs, EuVECAs, EuSEFs and ELTIFs regardless of form. | Click to View | |||
| Fund Valuation | US | Q1 2025 | ISCO focus on potential conflicts of interest and valuation challenges | Interim report on IOSCO's review of its 2013 principles to focus specifically on — in particular around stale valuations, a lack of standardised valuation principles for investments that lack an observable market, and potential vulnerabilities | In 2013, IOSCO published a set of 11 principles for the valuation of collective investment schemes (CIS), which are intended to be a basis against which both the industry and regulators can assess the quality of regulation and industry practices concerning CIS valuation. In 2024 IOSCO commenced review of the Principles with a view to determining whether updates are necessary or should be supplemented with additional guidance taking into in consideration the outcomes of IOSCO’s work on Liquidity Risk Management in OEFs as well as IOSCO’s work on Emerging Risks in Private Finance; Interim report to IOSCO Board on proposed policy direction by Q1 202 | Click to View | ||||
| Valuation | UK | No speecific timeline projected | No speecific timeline projected | FCA review of valuation processes for private market assets | Scope: asset managers alternative investment fund managers (AIFMs) investment and portfolio managers investment advisers FCA expect firms to comprehensively identifying gaps in the valuation process and make improvements in: The governance of their valuation process. Identifying, documenting, and addressing potential conflicts in their valuation process. Ensuring functional independence for their valuation process. Incorporating defined processes for ad hoc valuations. Encourages use of third-party valuation advisers (Does FA have a scope to build valuation software based on industry standards) | Governance: Firms should consider whether their governance arrangements ensure there is clear accountability for valuation and robust oversight of the valuation process, including accurate and detailed record-keeping of how valuation decisions are reached. Conflict of Interest in the areas of: - Investor Fee: 1. whether fees paid by investors are linked to valuations; 2. Whether any conflicts are dissuading managers from from taking appropriate write-downs to avoid lost management fees 3. whether there is a direct link between the current net asset value (NAV), calculated using valuations, and fees paid by investors - Asset Transfers: where assets are transfered, is manager’s valuation determining the transfer price affecting the interests of buyers, sellers and remaining investors - Redemptions and subscriptions: 1. open-ended funds investing in private assets where redemptions and subscriptions are priced using the fund’s NAV; assess potential for harm and conflicts between new, exiting and remaining investors, who could be transacting at prices that do not always reflect the value of the fund’s investments. 2. While trusts do not offer redemptions and subscriptions, investors use NAV, valuation calculations to trade investment trust shares potentially giving rise to valuation-related conflict. - Investor Marketing: whether realised and unrealised performance in their marketing materials. - Secured Borrowing: NAV depends on how the borrower values their unrealised investments leading to a potential conflict of interest where valuations could be inflated to attract a greater amount of initial borrowing or avoid breaching an LTV (Loan to Value) covenant. - Volatility: whether true level of investment risk and the current value of their investments is clearly assessed and documented (Valuation methodologies) ex: exxagerating the stability of valuatins over longer periods of time - Employee Remuneration: whether remuneration is linked to valuations where variable pay is linked to the change in NAV over a defined period. Methodologies: Firms to apply valuation methodologies (market or Income) and assumptions consistently and make valuation adjustments solely on the basis of fair value. Adopt Industry guidelines (Ex: IPEV International Private Equity and Venture Capital Valuation (IPEV) GuidelinesLink is external) to ensure their approach is in line with standard market practice. Functional Independence: Firms to aassess whether they have sufficient independence in their valuation functions and the voting membership of their valuation committee. Firms to establish clear policies, procedures, valuation methodologies, frequent valuation cycles (Full-scope UK AIFMs must ensure they calculate the NAV at each issue or subscription or redemption or cancellation of units or shares and at least once a year) Reporting: Full-scope UK AIFMs must ensure they inform investors in the fund of the valuations and their calculations; reporting quantitative and qualitative information on performance at both the fund and asset-level, as well as holding regular conference calls with investors. Next Steps: FCA to work with outlier firms, repeal and replace assimilated AIFMD law with rules in the FCA Handbook ,and share findings with Bank of ngland, IOSCO Committee etc. | Yes - to be discussed | Watching brief/ impact on clients | Click to View |