Regulatory Alerts2013-12-17
Valuation Methods for Fixed Income Instruments
The Securities and Exchange Commission of Sri Lanka issued a directive mandating standardized daily valuation methods for fixed income instruments in Unit Trust Funds to enhance industry uniformity and accuracy. Money Market Funds and repo investments must be valued at cost plus accrued interest, while all other fixed income securities require Mark to Market valuation using the Central Bank of Sri Lanka’s daily yield curve, with quoted debt securities valued at last traded prices unless inactive for 90 days. Managing companies must align interim and year-end financial statements with Sri Lanka Accounting Standards, disclose these valuation policies in explanatory memoranda, and comply with this directive immediately as it supersedes all prior related regulations.