The FSA has announced it will allow fund managers to adopt single or dual pricing of units in authorised Collective Investment Schemes in order to better fit with principles-based regulation.
Investment companies with variable capital currently have to value units on a single-pricing basis while authorised unit trusts have the flexibility to quote single or dual prices but ICVCs will now be able to offer both options.
Dual pricing is when one price is quoted to investors who want to buy units and a lower price is quoted to those who want to sell units.
The FSA consulted on allowing both AUTs and ICVCs to adopt the flexibility of both dual pricing or single pricing in its consultation paper published in April 2006. The relevant amendments to rules and guidance in COLL will come into effect from October 6.
FSA director retail policy and asset management sector leader Dan Waters says: “No method of unit pricing is perfect or demonstrably superior to others in every situation. The flexibility we are introducing fits with the principles-based regulation we seek to operate, so that each fund manager may judge for itself how to meet the needs and expectations of investors, provided the method adopted is compatible with fundamental standards of accuracy, fairness to all unit holders and transparency and can be understood by investors.”