Last Published 11/11/2022 9:54:16 AM By Tridion Admin
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New SEC Rule on Fair Value Determination Needs Careful
Consideration
Aimed at modernizing valuation practices, the compliance date to
meet the requirements of the new U.S. SEC Rule 2a-5 is closing in
on 8 September. The rule guides registered investment and business
development companies to build a principles-based approach to
valuation. To comply with the new regulation, how can asset owners
and fund managers improve transparency in asset valuations? We
discuss the integral aspects of determining fair-value pricing and
share insights to help prepare for compliance.
The first overhaul of the valuation process in a decade, the new
rule shines a spotlight on the widespread use of third-party
pricing services, stating that investors should select an effective
pricing vendor with comprehensive services and data to meet Rule
2a-5's requirements. As fund boards and their advisers study its
requirements, choosing a pricing and valuation vendor is paramount
in guaranteeing service value and successful compliance.
This article discusses
A Principles-based approach to valuation
Three key aspects that pricing vendors can offer boards of
directors at funds
Growing importance for data quality, coverage and clarity
Transparency for valuation assumptions, data, inputs and
analytics
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