The Capital Markets Authority (CMA) has published new guidelines for fund managers who run Collective Investment Schemes(CIS).
These rules, which take effect on 1st January 2021, will be used to determine how a scheme is valued, measured in terms of performance and how it reports to the regulator.
This is in line with international best practice that requires collective investment schemes to standardize investment performance, do measurement and make presentations.
‘The Authority said it had crafted new guides for CISs due to noted inconsistencies in performance measurement and presentation.
“Observation and feedback from the market necessitated the development of these new guidelines. The idea is to ensure comparability and consistency of information presented in performance reports generated by CISs,” said CMA Acting Chief Executive Officer Wyckliffe Shamiah.
The standardization of performance measurement and presentation is critical to investor protection and the fair treatment of customers.
“The Institute of Certified Investment and Financial Analysts (ICIFA) supports the efforts by the Authority in standardizing investment performance measurement and reporting for CISs’,” said ICIFA Chief Executive, FA Diana Muriuki-Maina.
These guidelines will enhance accountability and transparency in the reporting of CISs’ performance which will, in turn, boost investor confidence.
ICIFA said it was looking forward to further collaboration with the Authority to provide capacity building to industry practitioners to ensure proper implementation and adherence to these new requirements.
‘The Fund Managers’ Association (FMA) has been pleased to provide input to the Capital Markets Authority, which was given consideration while preparing these guidelines.
In particular, the FMA welcomes the clarity and standardization that the guidelines provide and that they are aligned with global professional performance standards’, said FMA Chairman, Jonathan Stichbury.
Under the guidelines, CIS fund managers will be required to establish comprehensive, well-documented investment policies and procedures that are used to value assets held by collective investment scheme.