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Press Release

For immediate release: Thursday 30 January 2003


IMA today published its response to the FSA’s proposals on best execution in Consultation Paper 154.  It welcomed the FSA’s suggestion that best execution should be regarded as the result of the investment decision process rather than solely the search for the best price on a particular transaction.  However, it urged the FSA to recognise that, when considering what should be reported to the regulator, some costs are out of the control of asset managers and some can only be calculated “in hindsight” after a trade.

In addition, IMA welcomed the FSA’s desire to remove inappropriate prescriptive remedies in any emerging best execution regulation.  Noting, however, that the issue is also being looked at from a European perspective in the context of revising the Investment Services Directive, it urged the FSA not to impose any regulation that would put the UK’s asset management industry at an international competitive disadvantage.

Julie Patterson, Director, Regulation & Taxation, at the IMA, commented:

“Asset management is not a transaction based service, unlike broking, and should not be treated as such.  Asset managers have an explicit motive to achieve best execution on all transactions since that helps to achieve the optimum investment performance.  Firms are accountable to their clients for performance, and competitive forces provide a powerful incentive. 

The FSA has recognised that best execution is a process and they are veering away from prescriptive regulation.  These are both welcome developments.  IMA will continue to liaise with the FSA and European authorities to ensure these proposals are developed in a way that is both practical and sensible for the asset management industry.”

The IMA’s full response to CP154 is attached.

For further information, please contact: 
Julie Patterson, Director of Regulation and Taxation, IMA, 020 7831 0898
Clare Arber, Head of Communications, IMA, 020 7831 0898

Notes to Editors:  

1.  The IMA is the trade body representing the UK asset management industry, representing some £2 trillion funds under management and over 99% of the UK investment funds industry (Unit Trusts and OEICs). 

2.  The current ‘best execution’ framework focuses on achieving the best price available at the time of a transaction.  The FSA’s consultation paper CP154 proposes that instead the emphasis should be on achieving the best overall net result for a customer (i.e. including consideration of the direct and indirect costs of trading).

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