News
FOCUS - Winter 2002/3
GIPS: Going for GOLD!
Industry comment by Elizabeth Tan, Pricewaterhouse Coopers
The Global Investment Performance Standards (GIPS®) have been an unqualified success in bringing to the industry a single global investment performance standard. The investment management community has feverishly embraced these best practices and we have seen the standards continue to evolve with the introduction of 5 technical subcommittees and the approval of various guidance statements, Translations of GIPS (TGs) and Country Versions of GIPS (CVGs). The CVGs incorporate the core GIPS Standards with certain additional provisions which satisfy regulatory requirements or incorporate "well-established practices" relevant to that particular country. To a degree, this undermines the notion of a single uniform global standard. This is one of the areas that the introduction of the "Gold" GIPS.
Gold GIPS: The Vision
At present, the likely adoption date for Gold GIPS is 2005. The process of this IPC initiative has only just commenced with the approval of the implementation plan at the last IPC meeting in Berlin. The implementation plan encompasses the following key milestones:
- Incorporate all "Technical" Subcommittee proposals
- Upgrade selected GIPS recommendations to requirements
- Improve and clarify current GIPS wording
- Formalise provisions from IPC approved Guidance Statements
- Introduce new provisions based on global well established best practices (with reference to CVGs)
- Final editing of the Gold GIPS to ensure consistency
- Release Gold GIPS for public comment
One of the significant challenges in developing the Gold GIPS is to eliminate the differences in "well established practices" between the CVGs and GIPS by either accepting or rejecting such practices during the evolution process. As a result, only CVGs with differences based on unique regulatory, legal or taxation requirements would continue to exist. This would be the ideal outcome. However, bringing together certain local "well established practices" into the one standard may be an arduous task. For example, it will be difficult to address inconsistencies such as the 10-year history requirement under the US CVG and what will be the verdict on mandatory verification, which is currently a requirement under the UK CVG? It will be interesting to observe what the outcomes of such challenges will be.
Ensure that your Firm has its say!
The proposed Gold GIPS will be released for public comment in late 2003. Asset managers and other interested parties should review the proposed Gold GIPS standards carefully during the comment period and assess the impact on their Firms. This will be the final opportunity for the investment management community to provide feedback and to influence the amendments and the new provisions within the revised standards. It will be well worth the time and effort, as the IPC will give thoughtful consideration to all submissions. The standards are evolving, but we can all have a say in it.