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SEC Proposes to Modernize Framework for Fund Valuation Practices



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.

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


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:

  • 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.

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.


Stockify goes fully Digital, offers Mutual Funds and Dematerialization of shares




In a strategic move to expand its offerings and provide a comprehensive suite of financial services, Stockify, a leading platform for Unlisted and pre-IPO shares in India, has announced plans to venture into the Mutual Fund space.

This development comes as part of Stockify’s mission to assist High-Net Individuals (HNIs) and Non-Resident Indians (NRIs) in accessing various investment opportunities in India via the pre-IPO route and maximizing their wealth. The company is also set to facilitate the Dematerialization of Shares. (Conversion of Physical Share to DEMAT account.)

Founded by Piyush Jhunjhunwala (CA, CPA) and Co-Founded by Rahul Khatuwala (CA) both seasoned finance professionals with decades of experience in global conglomerates.

Stockify has already carved a niche for itself in the Indian Financial landscape. The platform primarily focuses on providing access to Blue-Chip Stocks before their listing on the Indian Stock Market (via the Pre IPO Route) enabling early investors to potentially achieve significant returns. While expressing the company’s intent behind expanding its services, Jhunjhunwala said, “Mutual Funds are the backbone of the Indian Equity market, and we believe it is important that NRI and retail investors in India can greatly benefit from our new offering and this will help them in creating long-term wealth.”

The recent announcement of Stockify entering the Mutual Funds market follows the company’s successful acquisition of a Mutual Fund license in the first quarter of 2023. Alongside Mutual Funds, Stockify intends to offer an array of other financial products, like Start-up Funding, fixed investment products like Bonds and Non-Convertible Debentures (NCDs) and Insurance-Linked Investments, in the coming months. Notably, Stockify plans to make all its products and services 100% accessible online, aligning with the Digital India vision of our beloved Prime Minster Mr. Narendra Modi.

Currently, Stockify boasts 70 Unlisted/pre-IPO companies on its platform, with in-depth research conducted on all of them as stated by Jhunjhunwala. It offers a simple online process where transactions can be completed online, and shares get transferred to the clients DEMAT account on the same day.

Stockify’s global presence was recently showcased at the Dubai Fintech Summit (DFS). The two-day event brought together over 5,000 C-suite leaders, 1,000-plus investors, and 150 speakers from around the world. Stockify was selected as one of the proud exhibitors at the summit, solidifying its position as one of the world’s largest providers of pre-IPO and Unlisted Stocks in India.

With its ambitious expansion plans and commitment to innovation, Stockify is set to continue revolutionizing the way investors access and engage with financial opportunities in India and beyond.

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VerifyVASP Wins Hong Kong’s IFTA Fintech and Innovation Awards 2022/23: Regulatory Technology Award




VerifyVASP was awarded the Institute of Financial Technologists of Asia (IFTA) Fintech and Innovation Awards 2022/23 for Regulatory Technology. The awards exhibit the extraordinary achievements made by companies and individuals in the finance and technology industries.

The IFTA Awards, themed “Game Changers: The Rise of Next Gen Fintech”, celebrates ground-breaking ideas and technologies that are shaping the future of finance. The distinguished Guest of Honour presenting the IFTA awards was the Under Secretary for Financial Services and the Treasury for Financial Services in the Hong Kong SAR, Mr. Joseph Ho-Lim Chan.

VerifyVASP has established itself as a comprehensive Travel Rule solution provider catering to Virtual Assets Service Providers (VASPs) worldwide. Its commitment to facilitating full compliance with Travel Rule regulations across multiple jurisdictions has earned it this prestigious recognition.

This accolade comes at an opportune time, as VerifyVASP supports the Hong Kong Virtual Asset Trading Platforms (VATPs) in adhering to the regulatory framework set forth by the Hong Kong Securities & Futures Commission, which came into effect on 1 June 2023. VATPs are granted a grace period till 1 January 2024 to ensure compliance with Travel Rule requirements.

The IFTA Fintech and Innovation Award underscores VerifyVASP’s capabilities, including:

  • Facilitation of counterparty due diligence: VerifyVASP assists VASPs in counterparty due diligence before the first transaction, to stringent standards akin to that observed in correspondent banking. This is achieved through VerifyVASP’s own rigorous due diligence process, encompassing over 100 VASPs.
  • Immediate and secure transmission: Leveraging a scalable architecture, VerifyVASP ensures immediate and secure transmission of required information, alongside verification of such information. To date, the platform has processed over 5 million transfers.
  • Adherence to international data protection laws: VerifyVASP complies with international data protection law thanks to its decentralised, end to end encrypted architecture. This dedication to data security and privacy sets it apart in the industry.
  • Asset agnostic: VerifyVASP’s capabilities extend to accommodating any type of virtual asset, having processed over 400 cryptocurrency variants on its platform.
  • Integration of third-party screening solutions: VerifyVASP seamlessly integrates third-party solutions, allowing for efficient screening of originators or beneficiaries before blockchain transactions.


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Nagad’s Digital Bank on cards, Sadaf to lead the side




Nagad, Bangladesh’s leading Mobile Financial Service (MFS) provider, is gearing up to establish the much-anticipated digital bank, as it is going to secure a licence from the Bangladesh Bank within a couple of months.

Sadaf Roksana, a co-founder and executive director of Nagad Ltd., has been entrusted with the responsibility of leading her company’s transformative venture that will bring greater convenience to the lives of millions of Bangladeshis, reducing their reliance on traditional brick-and-mortar banks.

The MFS provider earlier applied to secure a digital bank licence following the central bank’s call for applications through its website. The Bangladesh Bank also formulated necessary guidelines to widen and accelerate financial inclusion, which will also create jobs for young IT workers.

The world’s fastest mobile money carrier is going to venture into the digital banking era at a time when the financial landscape across the globe is fast evolving towards digitalisation, driven by technological advancements and changing consumer preferences.

Taking on the new assignment, Sadaf, a seasoned financial executive with a remarkable track record in the fintech industry, is poised to steer Nagad’s digital bank towards success. Once Nagad gets the digital bank licence, it will provide its consumers with innovative and convenient banking solutions.

“We are very excited that we are going to introduce digital banking services to the people of Bangladesh within a couple of months,” Sadaf said, adding, “This endeavour aligns perfectly with our vision of enhancing financial inclusion and ensuring easy access to all financial services also at affordable prices.”

Nagad is already well-equipped to launch a digital bank. It will start serving customers soon after getting the licence, Sadaf assured.

Under its digital banking platform, Nagad will introduce many new services, such as single-digit and collateral-free loans for small informal businesses and farmers who now are to take loans from moneylenders even at 40% interest rate per day, she pointed out.

“Thus, we will encourage them to come under financial inclusion, thus putting their money into the formal channel,” she expressed her optimism.

To assess one’s creditworthiness, Nagad has created an AI-based credit rating system that will analyse all transactions-related data available on public domains using one’s NID and mobile number, Sadaf Roksana added.

As Nagad goes ahead with its plans, all eyes will be on Sadaf Roksana and her team as they will embark on this exciting journey towards a more digitised and inclusive financial future for the country.

SOURCE Nagad Limited

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