Temporary regulatory easing in NPF and UIF asset valuation
The Bank of Russia has approved a decision permitting non-governmental pension funds (NPF) and management companies (MC) not to revaluate temporarily (until 1 January 2021) securities in the portfolios of pension assets and assets of closed-end unit investment funds (closed-end UIF) for qualified investors. This decision was made due to market volatility and is intended to support market players during the period of the coronavirus pandemic by mitigating the risks of asset fire sales. The regulator’s instructions in this regard were registered by Russia’s Ministry of Justice and become effective on 2 June 2020.
These instructions encompass NPFs, the governmental MC and private MCs of the Pension Fund of Russia, as well as the MCs of closed-end UIFs for qualified investors. As a result, when calculating their net asset value, these market participants may recognise securities acquired before 1 March 2020 at their fair value as of 1 March 2020. Debt securities bought from 1 March 2020 through 30 September 2020 may be recognised at their fair value as of the date of their purchase.
NPFs and MCs wishing to make advantage of these regulatory relaxations are to make related decisions before 30 September 2020.