IOSCO Proposes New Principles for Valuing Collective Investment Schemes
The International Organization of Securities Commissions (IOSCO) has published its Consultation Report on Valuing Collective Investment Schemes (CIS), inviting feedback from market participants and regulators on an updated set of valuation principles for investment funds. The new recommendations aim to modernize global standards amid the rapid evolution of financial markets and the growing prominence of alternative assets in retail and institutional portfolios.
The report consolidates and updates IOSCO’s 2007 Principles for the Valuation of Hedge Fund Portfolios and its 2013 Principles for the Valuation of Collective Investment Schemes. Together, these frameworks have long served as the foundation for ensuring accurate and fair valuations across the asset management industry. The consultation period runs until February 2, 2026, with a final report expected later in the year.
“This consultation marks a vital step in ensuring that valuation practices for collective investment schemes continue to remain robust and relevant in light of the evolving dynamics and developments, as well as increased sophistication in the markets today,” said Jean-Paul Servais, Chair of the IOSCO Board.
Takeaway
Modernizing Principles for a New Investment Landscape
IOSCO’s preparatory review found that while its previous principles have been widely implemented and remain broadly effective, the market’s structure has shifted dramatically in the past decade. The rise of private assets, alternative investments, and increased retail participation in complex fund structures has exposed the need for renewed guidance on valuation integrity and governance.
The new report includes 13 updated recommendations focused on key areas such as:
- Governance and oversight arrangements under normal and stressed conditions
- Fair value methodologies for illiquid assets
- Backtesting and periodic validation of valuation models
- , particularly when using external valuation service providers
- Detection of stale valuations and enhanced record-keeping practices
“In view of CISs’ growing exposure to less liquid and alternative assets, updating the valuation principles is essential to secureguarding investor confidence,” said Jessica Reyes, Chair of IOSCO’s Committee for Investment Management. “The updated recommendations build upon and modernize the strong foundations laid out in the 2007 and 2013 frameworks.”
Takeaway
Reinforcing Investor Protection and Market Integrity
At the heart of the consultation is the principle that accurate, transparent asset valuation is critical to investor protection. The net asset value (NAV) of a fund determines not only the price at which investors enter or exit but also forms the basis for fee calculation, performance reporting, and fund comparisons. IOSCO warns that improper valuation can lead to investors overpaying or receiving less than fair value, eroding returns and trust in collective investment structures.
Recent episodes of valuation stress during periods of and price dislocations—have reinforced the importance of robust valuation governance and data integrity. The new recommendations emphasize the need for ongoing due diligence, especially when outsourcing valuation to third parties, and for oversight frameworks capable of responding to rapidly .
IOSCO’s proposed updates also encourage regulators to adopt consistent standards that support global interoperability while leaving flexibility for jurisdiction-specific applications. The organization intends for the new principles to serve as a living framework that can evolve with technology, data availability, and .
Takeaway
