Can anyone explain the diff between fair and market value - and in GIPS context?
Most of the time they are identical but usually fair value dominates market value. This is because you may see a quoted price on a market that nobody is willing to buy at. Fair value assumes two unrelated parties that are willing to transact at that price.
It boils down to what market we are talking about. On a regulated stock exchange fair value and market value would be the same.
^ Well said. Fair value - Definition: “The price that will be formed between the unrelated and well informed parties in the transaction before the deal.”.
The way I think of it is as follows. Imagine a thinly-traded company on the stock exchange. Shareholders or company executives could trade between each other with the intention of inflating the market price, and therefore the company’s market value. But the market value is not equal to the fair value because transactions were not undertaken at “arm’s length” i.e. a transaction in which parties are unrelated and acting in their own individual interests. The potential for this type of abuse is why GIPS says that fair value supercedes market value.