After years of development, the 2020 edition of the Global Investment Performance Standards (the “2020 GIPS® standards“) has been finalized and is now available to the public through the CFA Institute website. The effective date for the 2020 GIPS standards is January 1, 2020, which means that firms that claim compliance need to be prepared to adopt and implement the bulk of the changes at that point. We have been assisting firms to conduct a gap analysis to identify the changes that will impact their firm and determine how to address all the new provisions detailed within the 2020 GIPS standards. We have also been working with firms who are seeking to claim GIPS compliance for the first time. Since they have not claimed GIPS compliance in the past, we are helping them to implement the 2020 edition of GIPS standards – even for some firms that expect to claim GIPS compliance by the end of third quarter. At this point, we don’t believe there is a good reason for these firms to adopt the 2010 edition since the 2020 edition is now available.
One key thing that firms that currently claim GIPS compliance will need to do is review their firm’s GIPS-compliance policies and procedures (GIPS P&P) to determine which changes impact their program. For example, if the firm doesn’t manage pooled funds, then the provisions applicable to pooled fund managers won’t be don’t need to be addressed in the firm’s GIPS P&P. But if the firm manages overlay portfolios, then the firm will need to address the provisions related to the calculation of overlay exposure. Going through all the provisions and confirming which are applicable is a good first step. In addition, amendments will need to be made to the terminology that is used throughout their GIPS P&P. For example, “compliant presentations” are now referred to as “GIPS Reports.” Firms should also update any references to specific GIPS provisions to reflect any changes in wording and to use new reference identifiers. For example, provision 0.A.9 in the 2010 edition is now provision 1.A.11 in the 2020 edition. Additionally, if the firm has incorporated disclosure checklists or other reference materials as part of their GIPS policies and procedures, these will need to be updated in order to match the revised requirements. We prepared a checklist to assist firms who need to update their GIPS compliance program to comply with the requirements of the 2020 GIPS standards. Click here to view the checklist.
