IMA MEMBERS ON MiFID: STILL ROOM FOR SIGNIFICANT IMPROVEMENT

It has been one year since the implementation of MiFID, and as part of the MiFID Implementing Directive, the European Commission is expected to present a report to the European Parliament and to the Council on the availability, comparability and consolidation of information concerning the quality of execution of various execution venues. In order to inform the Commission's report, the IMA has conducted a survey of its members in order to gather views on how the quality of information has changed since the implementation in November 2007.

The IMA's authoritative Asset Management Survey 2007 recorded that IMA member firms were managing 44% of the domestic equity market for clients and £1.1 trillion in fixed income instruments. It is in relation to these markets that the IMA Execution Quality Survey focuses.

The key issues are:

• Settlement certainty and counterparty risk have become the most relevant factors in the provision of best execution following the collapse of Lehmans.
• Brokers should be required to describe their execution policies and practices upon request.
• A consolidated tape should be introduced for all EEA equity markets.
• An order routing rule for EEA equity venues similar to Reg NMS in the US should be introduced.
• Fixed income managers are generally content with the information that they are getting - absent the credit crunch.

Commenting, Guy Sears, Director, Wholesale at IMA said:

"The survey findings show that as far as UK equities are concerned, IMA members clearly think that the information quality has significantly deteriorated.  Members would welcome the introduction of a rule for order routing similar to Reg NMS in the US. Counterparty risk and settlement certainty dominates the selection process of brokers and venues following the settlement debacle arising in London from the Lehman collapse.

Fixed income managers are generally content with the information that they are getting but note that all data have deteriorated in quality during the credit crunch."         

A copy of IMA's Survey is attached.

-Ends-

Notes to Editors:

1. The Markets in Financial Instruments Directive (MiFID) is European legislation that came into effect on November 1, 2007, supported by an implementing directive and regulation,  replacing and updating the Investment Services Directive. MiFID's aim is to enhance the single European financial marketplace, increase market transparency and improve investor protection

2. On April 6, 2005, the Securities and Exchange Commission adopted Regulation National Market System (Reg NMS), a series of initiatives designed to modernise and strengthen the US financial market system for equity securities. It ensures the equity markets in US operate as one market, avoiding previous widespread fragmentation of liquidity across many competing venues.

3. About Investment Management Association (IMA) - IMA is the trade body for the UK's £3.4 trillion asset management industry. The money its members manage is in a wide variety of investment vehicles including authorised investment funds, pension funds and stocks and shares ISAs.  Its role is to represent the industry and promote high standards.

For further information, please contact:
Noreen Shah, Press Officer, IMA, 0207 831 0898