COLL 8.2.9 Fair Value Pricing for Securities—QFC Retail Schemes

(1) If the operator of a QFC retail scheme has reasonable grounds to believe—
(a) that no reliable price exists for a security at a valuation point; or
(b) that the most recent price available for a security does not reflect the operator's best estimate of the value of the security at the valuation point;
the operator must value the security at a price that, in its opinion, reflects a fair and reasonable price for the security (the fair value price).

Note Security and valuation point are defined in the glossary.
(2) Without limiting subrule (1), the operator may use the fair market price for the security if—
(a) there has been no recent trade in the security; or
(b) a significant event has happened since the most recent closure of the market where the price of the security is taken.
(3) For subrule (2) (b), an event is significant if, because of the event, the most recent price of the security (or a basket of securities that includes the security) is materially different from the price that the operator believes on reasonable grounds would have existed at the valuation point had the relevant market been open.
(4) In deciding whether to use a fair value price for the security, the operator must consider the following:
(a) the nature of the QFC retail scheme;
(b) the kind of security;
(c) the basis and reliability of the alternative price used;
(d) the operator's policy on the valuation of scheme property as disclosed in the latest filed prospectus.
(5) Subrule (4) does not limit the matters the operator may consider.
(6) If the unit price is calculated by the operator using—
(a) properly applied fair value prices in accordance with this rule; and
(b) a documented fair value pricing policy for the scheme;
any subsequent information that indicates that the price should (or should perhaps) have been different from the price calculated by the operator does not, of itself, establish that the price was incorrectly calculated by the operator.
Derived from QFCRA RM/2010-05 (as from 1st January 2011)