Concerns that war with Iraq will result in market disruptions have prompted the Investment Funds Institute of Canada to plan a possible conference call on fair valuation of funds, securities and portfolio assets.

In a letter to IFIC’s board of directors, regulatory committee, fair valuing and portfolio pricing working groups as well as member senior and affiliate officers, John Mountain, IFIC vice president of regulation, and senior counsel Leslie Byberg say the call will be required if there is an unexpected market closure, or if significant events impacting asset values occur after the close of the Asian and European markets but before funds are valued at 16:00 ET.

IFIC plans to convene the conference call as quickly as possible should the need for a fair valuing analysis arise.

The institute released final guidelines last year with an aim to provide direction in routine fair-valuing decisions, but there are no rules for fair valuation of securities in the event of extreme circumstances.

“It’s the kind of thing where you have to act quickly and assess quickly,” says Byberg. “Co-ordinating efforts is key.”

The most notable example of events where fund valuation became a problem occurred following the September 11 attacks when U.S. markets closed for a week and Canadian markets were down for two days.

At that time, fund trading suspended immediately and the Canadian Securities Administrators exempted funds with exposure to halted U.S. securities from pricing them while markets remained closed.

Although IFIC’s working group on fair valuation deliberated on the results of a catastrophic market shutdown, the scenario was unprecedented before the attacks.

So far, the latest military actions have not prompted member firms to request the call. “Members are monitoring events, and we are to the extent that we can,” says Byberg. “We’ll see what happens.”