Q & A Database

The GIPS Standards Q&A database contains questions and answers (Q&As) on various searchable topics that provide additional interpretation on an issue. Q&As are considered to be authoritative guidance and must be followed in order to claim compliance with the GIPS standards.

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Archived

Effective: 1 March, 2006 - 31 December, 2013

Categories: Valuation

Source: GIPS Handbook, 2nd Edition

Firm B has several portfolios invested in emerging market debt and other thinly traded securities. What is a reasonable method for valuation of these securities?

Firm B must determine a reasonable valuation method for the thinly traded securities held in its portfolios. One example of a “reasonable method” is to seek out three separate bids from three non-affiliated brokers, average those three prices, and consider this average to be a fair and acceptable representation of the market value. The valuation method policy developed by the firm must be applied consistently over time to ensure relatively consistent asset valuations.