For immediate release: Wednesday 5th June 2002

 

IMA CALLS FOR COMPETITION AND INVESTOR CHOICE IN EU SECURITIES MARKETS

The Investment Management Association, representing some of the largest users of securities markets, has responded to the European Commission’s consultation on the revision of the Investment Services Directive. 

The IMA welcomes the open approach taken by the Commission who have taken account of many comments made by the industry following an earlier round of consultation.

There remain, however, two major areas of concern.  First, the proposals require retail investment firms to ask questions about a customer’s financial situation before undertaking any transaction.  This could potentially prevent execution-only business.  IMA is seriously concerned that this could be intrusive, limit investor choice and discourage savings and investment both in the UK and throughout Europe.

Second, IMA welcomes the Commission’s proposals that competition should be encouraged between different types of securities market.  IMA in particular urges the Commission to avoid applying a “one size fits all” approach to regulation of official stock exchanges, alternative trading systems or mechanisms for an order to buy from one customer to be matched with an order to sell from another (otherwise known as internalisation).

Sheila Nicoll, Deputy Chief Executive of the IMA, said:

“The Commission must resist the temptation to over-regulate and stifle competition where the markets work well and where they provide choice for both retail and institutional investors.  Retail investors need to be given the choice of dealing without advice and its attendant costs.  Institutional investors should be free to deal where they can get the best deal for their customers.”

A copy of the response is attached.

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For further information please contact:

Sheila Nicoll, Deputy Chief Executive, IMA, 020 7831 0898

Clare Arber, Head of Communications, IMA, 020 7831 0898

Notes for Editors:

1.   The IMA was formed on 1 February 2002 when the Association of Unit Trusts and Investment Funds (AUTIF) and the Fund Managers Association (FMA) merged to establish a new association.  The two operations are now combined within the IMA to form an association that represents the whole of the UK investment management industry.  IMA members between them manage assets of over £2 trillion (£2,000 billion), including 99% of the investment funds industry.

2.   The EU Commission issued a consultation document on the revision of the Investment Services Directive on 25 March 2001.  Responses were required by 31 May 2002.  The directive, which was adopted in 1993, regulates investment firms and securities markets.  Included within the consultation are proposed conduct of business rules for investment firms and rules relating to securities markets, whether official stock exchanges “alternative trading systems” or other mechanisms for the execution of securities transactions. 

3.   Many IMA members are regulated under the ISD and all IMA members are major users of the securities markets covered by it.

4.   Euronext, the European stock exchange group issued a paper suggesting that all equity transactions should be required to take place on an official stock exchange and, in particular, that internalisation of orders should not be allowed. 

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Investment Management Association is a company limited by guarantee registered in England and Wales Registered number 4343737.  Registered office as above.