The International Organization of Securities Commissions has published a final report setting out 13 updated recommendations on valuing collective investment schemes, superseding its 2013 principles for collective investment schemes and 2007 principles for hedge fund portfolios. The framework is intended to strengthen the reliability, consistency and transparency of fund valuation practices, particularly as more funds invest in less liquid, illiquid and private assets and retail participation in such funds increases. It applies broadly to registered or authorized public open-ended funds, including exchange-traded funds, but excludes money market funds. The recommendations cover valuation governance and oversight, conflicts of interest, fair value methodologies, use of third-party valuation service providers, consistency and timeliness of valuations, disclosure, pricing errors and record-keeping. Key changes include expectations for an independent valuation function or independent oversight, guidance for stressed market conditions, disclosure where material conflicts cannot be effectively mitigated, documented controls for price overrides and stale or inaccurate valuations, at least annual review of valuation policies, prompt correction of material pricing errors with full investor compensation, and a new record-keeping recommendation to support compliance, audits and regulatory oversight. For other funds, such as closed-ended or private funds, IOSCO says the recommendations may serve as good practices depending on the jurisdiction.

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