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<\/p>\n\nRev. Daniel Ogbarmey Tetteh \u2014 Director General, SEC <\/p>\n<\/div>\n
The Securities and Exchange Commission (SEC), has allayed fears of the investing public, explaining that the objective of its latest directive on the use fair value\/mark-to-market valuation method in valuing portfolios of collective investment schemes such as unit trusts and mutual funds, was to provide consistency in the valuation of assets and portfolios in the securities industry.<\/h2>\n
It said it was also to ensure that the portfolios reflect market values, as well as investors of Collective Investment Schemes (CIS).<\/p>\n
\u201cThis is not a new valuation methodology, it is something that some of the market operators have been practicing, and we gave this directive because we want some uniformity in the marketplace.\u201d<\/p>\n
\u201cWhat the directive means is that if you are already using that methodology to value your stocks in your portfolio, you have your quantity versus the price. So what it means is that you want to see the market value of those securities that you have in your portfolio. So it shows the prevailing market prices of the securities,\u201d a Senior Manager at SEC, Anthony Dugbartey explained to the Graphic Business, following agitations by investors about what they see to be a \u2018haircut\u2019 on their investments.<\/p>\n
He added that \u201cit means that if you should sell bonds today and you sell at a discount, what value is the total bonds you are holding in your portfolio?\u201d<\/p>\n
\u201cSo when you exit, that is when you are likely to be affected by the directive. Otherwise, you don\u2019t get affected because this will just be in your books. Even if you are holding bonds directly and you want to sell before maturity, obviously you will not get the full value of the bonds you are holding,\u201d he said.<\/p>\n
SEC\u2008directive<\/strong><\/p>\n SEC directed fund managers, custodians and trustees to use fair value\/mark-to-market valuation method in valuing portfolios of collective investment schemes such as unit trusts and mutual funds.<\/p>\n This new method, which took effect on November 1, 2022, is to make all investments reflective of prevailing market values on the capital market and will result in some changes in the value of clients\u2019 holdings.<\/p>\n The use of the new method is due to the current market developments caused by the macroeconomic environment and its impact on underlying assets (particularly GoG bonds) which are currently trading at discounts.<\/p>\n Interpretation<\/strong><\/p>\n The directive by SEC appears to be causing some fear and panic among some customers of these market operators, some of whom have received notices from their institutions that the use of the new method may result in some losses when a withdrawal is made now.<\/p>\n Some of them who spoke to the Graphic Business were of the view that the directive was in contrast to President Akufo Addo\u2019s assurance that there would be no \u2018haircuts\u2019 on investments as a result of the current macroeconomic challenges.<\/p>\n No need to panic<\/strong><\/p>\n But speaking in an interview with the Graphic Business, the Director General of SEC, Rev. Daniel Ogbarmey Tetteh, urged calm and asked investors not to get ahead of themselves.<\/p>\n He said details of the government\u2019s engagements with the International Monetary Fund (IMF) was not yet out and reiterated the government\u2019s commitment to protect the domestic financial sector under an IMF programme.<\/p>\n \u201cWe need to remain calm and avoid panic reaction at this time. Debt restructuring doesn\u2019t necessarily mean a haircut; it could be prolonging maturities of existing debt.<\/p>\n \u201cSo let\u2019s wait for the details. The good thing is that the government is having series of engagements with various stakeholders to ensure a solution that makes sense for all,\u201d he stated.<\/p>\n<\/div>\n