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Northern Trust Supports Fair Value NAV Pricing for EMEA Clients

Northern Trust has implemented a daily Fair Value NAV Pricing tool for its fund management and institutional clients in Europe, Middle East and Africa (EMEA). Through an automated system, Northern Trust can fair value securities on a daily basis to deliver NAV (net asset value) unit prices significantly reducing opportunities for market timing in different time zones and after markets close.

“Fair Value NAV Pricing enables investors to gain a much clearer picture of the estimated value of the securities in their portfolio by taking into account the time between the investment market being closed and the NAV valuation point,” said Mark Schoen head of global product and strategy for EMEA at Northern Trust.

“This is an important tool, particularly where securities are traded in multiple markets, as it applies a standard adjustment to the closing price which is more accurate than other pricing methods,” he added.

Factors are applied to the closing prices to create a new fair value price, which is used to calculate the fund’s NAV. Clients can also receive reports that enable them to analyze the effect of Fair Value NAV Pricing on their funds and underlying securities.

“We are seeing an increasing demand from clients in Europe, particularly fund managers, for Fair Value NAV Pricing,” said Peter Cherecwich global chief operating officer for Northern Trust’s asset servicing business. “Around 90 percent of US mutual funds investing internationally are fair valued on a daily basis and this trend is spreading to EMEA, particularly as a result of market volatility.”

Northern Trust’s Fair Value NAV Product suite also caters for the fair valuing of annual financial statements around IFRS 7 and FAS 157.

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