On November 19, 2007, the Technical Committee of the International Organization of Securities Commissions (IOSCO) released a final version of its Principles for the Valuation of Hedge Fund PortfoliosThis link will open in a new window. This final publication follows the launch of a public consultation paper in March on valuation principles.
The Chairman of the IOSCO Technical Committee, Michel Prada, said: "The chief aim of these principles is to seek to ensure that hedge funds' financial instruments are appropriately valued, in particular, that these values are not distorted to the disadvantage of fund investors. Therefore, it is extremely important, that hedge funds adopt and operate robust portfolio valuation policies and procedures."
These principles describe techniques which seek to strengthen the controls, oversight and independence of the valuation process by emphasizing the importance of written policies which are implemented consistently and regularly reviewed. The principles also underline the importance of independent oversight in establishing and applying internal policies and procedures so as to reduce conflicts of interest for fund managers.
Québec's Autorité des marchés financiers (AMF) is a long-standing member of IOSCO and participates actively on IOSCO's committees.
This paper can be downloaded from IOSCO's website This link will open in a new window.