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.

Content from prior Q&As was included in the GIPS Standards Handbook as much as possible and many Q&As were archived. Change the Status drop-down filter to "Archived" to see the archived Q&As.

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Archived

Effective: 1 June, 2005 - 30 November, 2013

Categories: Definition of the Firm

Source: Investment Performance Council (IPC)

The upcoming release of the GIPS standards appears to have changed the options for defining a firm and the legal registration option is no longer available. Please explain how this change will affect firms that currently firms define themselves according to legal registration.

The revised GIPS standards specify that firms must be defined according to how the firm, subsidiary, or division is held out and marketed to clients and should be a distinct business entity.
It further clarifies in the glossary that a distinct business entity is a unit, division, department, or office that is organizationally and functionally segregated from other units, divisions,
departments or offices and retains discretion over the assets it manages and autonomy over the investment decision-making process. It goes on to provide several criteria that should be considered when defining the firm. One of those criteria is how the firm is legally registered and defined. Other considerations include defining a firm by a distinct market or client type (e.g. institutional, retail, private client, etc.) or a separate and distinct investment process. In most cases, the change in the firm definition requirement will not affect how firms are defined. However, the change emphasizes that the key to defining a firm is how it is marketed and held out to the investing public.