PUBLICATION OF CONDUCT STANDARDS 1 AND 2 OF 2020 – FSCA COMMUNICATION 25 OF 2020 (CIS), SOUTH AFRICA
On 19 May 2020, the Financial Sector Conduct Authority (FSCA) published Communication 25 of 2020 (CIS) (Communication), which details the publication of the final Conduct Standard on the ‘Net Asset Valuation Calculation and Pricing for Collective Investment Scheme Portfolios’ (NAV Standard), and the final Conduct Standard on the ‘Requirements for delegation of administration functions by a manager of a collective investment scheme’ (Delegation Standard).
The NAV Standard, which comes into effect on 19 November 2020, applies to CISs registered in terms of the Collective Investment Schemes Control Act, 2002, including CISs in property where applicable, but excluding CISs in participation bonds.
The NAV Standard, among other things, creates a legal framework for regulating the valuation of assets and the pricing of participatory interests in CIS portfolios, and for protecting investors against the potential risks of unfair customer outcomes.
The Delegation Standard came into effect on 19 May 2020 and, among other things, ensures that the delegation of administration functions by a manager of a CIS to a third party does not impair the prudent management of the administration of the scheme, and that the risks associated with a delegation arrangement are adequately assessed and managed.
A manager, including all its delegation arrangements that were approved by the FSCA prior to the publication of the Delegation Standard, must be compliant within the Delegation Standard by 19 May 2021.