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SEC Proposes to Modernize Framework for Fund Valuation Practices

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Washington, D.C.–(Newsfile Corp. – April 21, 2020) – The Securities and Exchange Commission today announced that it has voted to propose a new rule that would establish a framework for fund valuation practices.  The rule is designed to clarify how fund boards can satisfy their valuation obligations in light of market developments, including an increase in the variety of asset classes held by funds and an increase in both the volume and type of data used in valuation determinations.

The Commission last addressed valuation practices under the Investment Company Act in a comprehensive manner in a pair of releases issued in 1969 and 1970. Since then, markets and fund investment practices have evolved considerably. Many funds now engage third-party pricing services to provide pricing information, particularly for thinly traded or more complex assets. In addition, significant regulatory developments have altered how boards, investment advisers, independent auditors, and other market participants address valuation under the federal securities laws. The proposal recognizes and reflects these changes, including the important role that funds’ investment advisers may play and the expertise they may provide.

“The way a fund values its investments is critical to our Main Street investors,” said SEC Chairman Jay Clayton. “It affects the fees they pay, the returns they receive, and the value of the fund shares they hold.  Today’s proposal would improve valuation practices, including oversight, thereby protecting investors and improving market efficiency, integrity and fairness.”

The proposed rule would establish requirements for satisfying a fund board’s obligation to determine fair value in good faith for purposes of the Investment Company Act of 1940. The rule would require a board to assess and manage material risks associated with fair value determinations; select, apply and test fair value methodologies; oversee and evaluate any pricing services used; adopt and implement policies and procedures; and maintain certain records.

Recognizing that most fund boards do not play a day-to-day role in the pricing of fund investments, the proposed rule would permit a fund’s board to assign the determination of fair value to the fund’s investment adviser, subject to additional conditions and oversight requirements.  These detailed conditions include specific reporting by the adviser both periodically and promptly; clear specification of responsibilities and reasonable segregation of duties among the adviser’s personnel; and additional recordkeeping. The proposal makes clear that a board’s effective oversight of this process must be active.

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The proposal will be published on the Commission’s website and in the Federal Register. The comment period for the proposal will be open until July 21, 2020.

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FACT SHEET

Good Faith Determinations of Fair Value under the Investment Company Act of 1940

Highlights

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The Commission voted to propose a new rule establishing a framework for funds’ fair value determinations. Proposed new rule 2a-5 under the Investment Company Act of 1940 (the “Act”) would establish requirements for determining the fair value in good faith of a fund’s investments and would permit boards to assign the determination to the fund’s investment adviser, subject to board oversight and certain other conditions.  The rule would also define “readily available” market quotations for purposes of the Act.

Determining Fair Value in Good Faith

Proposed rule 2a-5 would require the performance of certain functions in order to determine fair value in good faith. These functions include, for example:

  • Periodically assessing and managing material risks associated with fair value determinations, including material conflicts of interest;
  • Selecting, applying and testing fair value methodologies; and
  • Overseeing and evaluating any pricing services used.  

The proposed rule would also require the adoption and implementation of written policies and procedures addressing fair value determination and the maintenance of certain records.

Who Performs Fair Value Determinations

Under the Act, securities and assets without readily available market quotations are valued at fair value as determined in good faith by a fund’s board of directors.  The proposed rule would confirm that a board can make this determination itself.  The proposed rule would also permit a board to assign the determination to the fund’s investment adviser, subject to additional conditions and oversight requirements.  The adviser would be required to carry out the fair value determination functions described above, and additional requirements would apply, including:

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  • Board oversight of the adviser;
  • Periodic and prompt reporting to the board;
  • Clear specification of responsibilities and reasonable segregation of duties among the adviser’s personnel; and
  • Keeping additional records relevant to the assignment to the adviser.

Because unit investment trusts do not have boards or investment advisers, the proposed rule would require the trustee to determine fair value in good faith.

Readily Available Market Quotations

Under the Act, fund investments must be fair valued where market quotations are not “readily available.”  The proposal would treat a market quotation as “readily available” only when that quotation is a quoted price (unadjusted) in active markets for identical investments that the fund can access at the measurement date. The proposal would also provide that a quotation is not readily available if it is not reliable.

Rescission of Prior Commission Releases and Review of Relevant Staff Guidance

In view of the proposal’s modernized approach to fund valuation, the Commission proposed to rescind two releases, Accounting Series Release 113 (ASR 113) and Accounting Series Release 118 (ASR 118), which provide Commission guidance on, among other things, how to determine fair value for restricted securities.

In addition, the proposal stated that certain staff letters and other staff guidance addressing fund valuation matters covered by the proposal would be rescinded or withdrawn in connection with any adoption of the rule.

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What’s Next?

The proposal will be published on the Commission’s website and in the Federal Register. The public comment period will remain open until July 21, 2020.

Fintech

How to identify authenticity in crypto influencer channels

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Modern brands stake on influencer marketing, with 76% of users making a purchase after seeing a product on social media.The cryptocurrency industry is no exception to this trend. However, promoting crypto products through influencer marketing can be particularly challenging. Crypto influencers pose a significant risk to a brand’s reputation and ROI due to rampant scams. Approximately 80% of channels provide fake statistics, including followers counts and engagement metrics. Additionally, this niche is characterized by high CPMs, which can increase the risk of financial loss for brands.

In this article Nadia Bubennnikova, Head of agency Famesters, will explore the most important things to look for in crypto channels to find the perfect match for influencer marketing collaborations.

 

  1. Comments 

There are several levels related to this point.

 

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LEVEL 1

Analyze approximately 10 of the channel’s latest videos, looking through the comments to ensure they are not purchased from dubious sources. For example, such comments as “Yes sir, great video!”; “Thanks!”; “Love you man!”; “Quality content”, and others most certainly are bot-generated and should be avoided.

Just to compare: 

LEVEL 2

Don’t rush to conclude that you’ve discovered the perfect crypto channel just because you’ve come across some logical comments that align with the video’s topic. This may seem controversial, but it’s important to dive deeper. When you encounter a channel with logical comments, ensure that they are unique and not duplicated under the description box. Some creators are smarter than just buying comments from the first link that Google shows you when you search “buy YouTube comments”. They generate topics, provide multiple examples, or upload lists of examples, all produced by AI. You can either manually review the comments or use a script to parse all the YouTube comments into an Excel file. Then, add a formula to highlight any duplicates.

LEVEL 3

It is also a must to check the names of the profiles that leave the comments: most of the bot-generated comments are easy to track: they will all have the usernames made of random symbols and numbers, random first and last name combinations, “Habibi”, etc. No profile pictures on all comments is also a red flag.

 

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LEVEL 4

Another important factor to consider when assessing comment authenticity is the posting date. If all the comments were posted on the same day, it’s likely that the traffic was purchased.

 

2. Average views number per video

This is indeed one of the key metrics to consider when selecting an influencer for collaboration, regardless of the product type. What specific factors should we focus on?

First & foremost: the views dynamics on the channel. The most desirable type of YouTube channel in terms of views is one that maintains stable viewership across all of its videos. This stability serves as proof of an active and loyal audience genuinely interested in the creator’s content, unlike channels where views vary significantly from one video to another.

Many unauthentic crypto channels not only buy YouTube comments but also invest in increasing video views to create the impression of stability. So, what exactly should we look at in terms of views? Firstly, calculate the average number of views based on the ten latest videos. Then, compare this figure to the views of the most recent videos posted within the past week. If you notice that these new videos have nearly the same number of views as those posted a month or two ago, it’s a clear red flag. Typically, a YouTube channel experiences lower views on new videos, with the number increasing organically each day as the audience engages with the content. If you see a video posted just three days ago already garnering 30k views, matching the total views of older videos, it’s a sign of fraudulent traffic purchased to create the illusion of view stability.

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3. Influencer’s channel statistics

The primary statistics of interest are region and demographic split, and sometimes the device types of the viewers.

LEVEL 1

When reviewing the shared statistics, the first step is to request a video screencast instead of a simple screenshot. This is because it takes more time to organically edit a video than a screenshot, making it harder to manipulate the statistics. If the creator refuses, step two (if only screenshots are provided) is to download them and check the file’s properties on your computer. Look for details such as whether it was created with Adobe Photoshop or the color profile, typically Adobe RGB, to determine if the screenshot has been edited.

LEVEL 2

After confirming the authenticity of the stats screenshot, it’s crucial to analyze the data. For instance, if you’re examining a channel conducted in Spanish with all videos filmed in the same language, it would raise concerns to find a significant audience from countries like India or Turkey. This discrepancy, where the audience doesn’t align with regions known for speaking the language, is a red flag.

If we’re considering an English-language crypto channel, it typically suggests an international audience, as English’s global use for quality educational content on niche topics like crypto. However, certain considerations apply. For instance, if an English-speaking channel shows a significant percentage of Polish viewers (15% to 30%) without any mention of the Polish language, it could indicate fake followers and views. However, if the channel’s creator is Polish, occasionally posts videos in Polish alongside English, and receives Polish comments, it’s important not to rush to conclusions.

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Example of statistics

 

Wrapping up

These are the main factors to consider when selecting an influencer to promote your crypto product. Once you’ve launched the campaign, there are also some markers to show which creators did bring the authentic traffic and which used some tools to create the illusion of an active and engaged audience. While this may seem obvious, it’s still worth mentioning. After the video is posted, allow 5-7 days for it to accumulate a basic number of views, then check performance metrics such as views, clicks, click-through rate (CTR), signups, and conversion rate (CR) from clicks to signups.

If you overlooked some red flags when selecting crypto channels for your launch, you might find the following outcomes: channels with high views numbers and high CTRs, demonstrating the real interest of the audience, yet with remarkably low conversion rates. In the worst-case scenario, you might witness thousands of clicks resulting in zero to just a few signups. While this might suggest technical issues in other industries, in crypto campaigns it indicates that the creator engaged in the campaign not only bought fake views and comments but also link clicks. And this happens more often than you may realize.

Summing up, choosing the right crypto creator to promote your product is indeed a tricky job that requires a lot of resources to be put into the search process. 

Author Nadia Bubennikova, Head of agency  at Famesters

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Nadia Bubennikova, Head of agency at Famesters

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Fintech

Central banks and the FinTech sector unite to change global payments space

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The BIS, along with seven leading central banks and a cohort of private financial firms, has embarked on an ambitious venture known as Project Agorá.

Named after the Greek word for “marketplace,” this initiative stands at the forefront of exploring the potential of tokenisation to significantly enhance the operational efficiency of the monetary system worldwide.

Central to this pioneering project are the Bank of France (on behalf of the Eurosystem), the Bank of Japan, the Bank of Korea, the Bank of Mexico, the Swiss National Bank, the Bank of England, and the Federal Reserve Bank of New York. These institutions have joined forces under the banner of Project Agorá, in partnership with an extensive assembly of private financial entities convened by the Institute of International Finance (IIF).

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At the heart of Project Agorá is the pursuit of integrating tokenised commercial bank deposits with tokenised wholesale central bank money within a unified, public-private programmable financial platform. By harnessing the advanced capabilities of smart contracts and programmability, the project aspires to unlock new transactional possibilities that were previously infeasible or impractical, thereby fostering novel opportunities that could benefit businesses and consumers alike.

The collaborative effort seeks to address and surmount a variety of structural inefficiencies that currently plague cross-border payments. These challenges include disparate legal, regulatory, and technical standards; varying operating hours and time zones; and the heightened complexity associated with conducting financial integrity checks (such as anti-money laundering and customer verification procedures), which are often redundantly executed across multiple stages of a single transaction due to the involvement of several intermediaries.

As a beacon of experimental and exploratory projects, the BIS Innovation Hub is committed to delivering public goods to the global central banking community through initiatives like Project Agorá. In line with this mission, the BIS will soon issue a call for expressions of interest from private financial institutions eager to contribute to this ground-breaking project. The IIF will facilitate the involvement of private sector participants, extending an invitation to regulated financial institutions representing each of the seven aforementioned currencies to partake in this transformative endeavour.

Source: fintech.globa

The post Central banks and the FinTech sector unite to change global payments space appeared first on HIPTHER Alerts.

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TD Bank inks multi-year strategic partnership with Google Cloud

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TD Bank has inked a multi-year deal with Google Cloud as it looks to streamline the development and deployment of new products and services.

The deal will see the Canadian banking group integrate the vendor’s cloud services into a wider portion of its technology solutions portfolio, a move which TD expects will enable it “to respond quickly to changing customer expectations by rolling out new features, updates, or entirely new financial products at an accelerated pace”.

This marks an expansion of the already established relationship between TD Bank and Google Cloud after the group previously adopted the vendor’s Google Kubernetes Engine (GKE) for TD Securities Automated Trading (TDSAT), the Chicago-based subsidiary of its investment banking unit, TD Securities.

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TDSAT uses GKE for process automation and quantitative modelling across fixed income markets, resulting in the development of a “data-driven research platform” capable of processing large research workloads in trading.

Dan Bosman, SVP and CIO of TD Securities, claims the infrastructure has so far supported TDSAT with “compute-intensive quantitative analysis” while expanding the subsidiary’s “trading volumes and portfolio size”.

TD’s new partnership with Google Cloud will see the group attempt to replicate the same level of success across its entire portfolio.

Source: fintechfutures.com

The post TD Bank inks multi-year strategic partnership with Google Cloud appeared first on HIPTHER Alerts.

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