FSA to change unit pricing rules

4 October 2006

The UK's Financial Services Authority (FSA) today confirmed changes to rules on how fund managers price units in collective investment schemes, providing them with greater flexibility.

Currently, different funds have different rules on how units are prices, with either single or duel pricing systems adopted, depending on whether they are investment companies with variable capital (ICVCs) or authorized unit trusts (AUTs).

Under the new regulations, the FSA says it plans to let either pricing system be used.

"No method of unit pricing is perfect or demonstrably superior to others in every situation," said the FSA's directory of retail policy and asset management, Dan Waters, explaining the decision.

"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."

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