Business Development, Client Service, General     20 July 2020

Independent Valuation Service

Curo Fund Services introduces a recent addition to our service offering to address the FSCA's Draft Conduct Standard - Regulation 28 Conditions for Derivatives. 

The FSCA has released a Draft Conduct Standard – Regulation 28 Conditions for Derivatives. The conduct standard introduces the requirement for independent valuation of unlisted instruments in any regulation 28 compliant fund. 

Curo Fund Services introduces a recent addition to our service offering to address this requirement. 

In 2019 Curo purchased a license for the Bloomberg BVal system.  

During the first quarter of 2020 we took the system into production, and we are now able to value a wide range of derivative instruments and structured products for our clients on a daily basis,” explains Product Development Executive, Darren Botha. 

The system uses industry standard derivative valuation models to value a wide range of derivatives and structured products. The valuation uses the terms of the instrument to link it to an appropriate BVal function to perform the calculation. 

From an operating model perspective our clients will provide us with details of the specific instrument, either in a pre-defined format, or if the client is using the Bloomberg AIM system, we will link BVal directly to the instrument setup on AIM. A valuation is run on the instrument to ensure all the parameters are correctly setup and the correct valuation is calculated. Once this is approved the valuation will run daily and will automatically be updated into the Curo Fund accounting system. 

In most developed markets the valuation of securities in a fund is a function performed by a party independent of the fund manager – in most cases the administrator or custodian performs the function.  

The reasoning behind the separation of the duty from the fund manager is governance, and to remove the inherent conflict of interest in a fund manager valuing the assets that they are holding. 

Historically, this has not been a requirement in South Africa with the exception of the hedge fund industry where this became a requirement when they were incorporated under CISCA. 

Now that this requirement has been established, Curo are set to engage their clients and other market players with this new offering. 

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