Shares and Securities: Valuation of shares and securities: Valuation of quoted shares: definition of market value
This guidance only applies to shares and securities quoted on the Stock Exchange Daily Official List. See CG59514 for guidance on shares and securities quoted on a recognised overseas stock exchange.
Valuations up to 5 April 2015
The market value of any share or security quoted on the Stock Exchange Daily Official List is usually either
- the lower of the two quotations on any day plus one quarter of the difference between the values, the `1/4 up value’
- the mid-point between the highest and lowest prices at which bargains were done on the day except bargains at special prices.
WHICHEVER IS THE LOWER. See the example below.
Bargains done at special prices are clearly shown in the Daily Official List. They should not be included in the comparison of highest and lowest price. In fact bargains at special prices are now very rare.
The first figure represents the prices which market makers are obliged to quote even if no bargains are done on the day. The second figure represents the prices at which shares were actually bought and sold during the day. If no bargains were done on the day for which you need a valuation you use the 1/4 up value. On 31 March 1993 the Daily Official List shows the following details for 25p ordinary shares in Marks & Spencer plc.
|Range of Prices quoted||335p - 340p||1/4 up value||=||336.25p|
|Range of Bargains done||337p - 341p||mid-point||=||339p|
The market value of Marks & Spencer plc 25p ordinary shares on 31 March 1993 is therefore 336.25p per share.
Valuations from 6 April 2015
The Market Value of Shares, Securities and Strips Regulations 2015 (SI 2015/616) took effect from 6 April 2015 and changed the way shares are valued for the purposes of the TCGA.
On any day that the Stock Exchange is open, the value will be
- the lower of the two prices shown in the Stock Exchange Daily Official List for that day as the closing price for the shares, securities or strips on that day
- one-half of the difference between those two figures.
If the Stock Exchange is closed then it will be the value on the latest previous day on which it was open using the method above.
However this valuation method won’t be used where special circumstances mean that the closing prices quoted in the Stock Exchange Daily Official List are by themselves not a proper measure of market value of the shares or securities.