ICI Supports Final Trade Management Guidelines for Best Execution

Washington, DC, November 22, 2002 - Final Trade Management Guidelines recently adopted by the Association for Investment Management and Research (AIMR) reflect comments received by AIMR on the proposal, including many of the Institute's comments.

In general, the guidelines are a compilation of recommended practices for developing and implementing processes relating to best execution that AIMR encourages investment management firms to adopt. In a February comment letter, the Institute noted that, due to the complexity of the concept of best execution, it is extremely important that each firm be able to tailor its processes to its specific circumstances. The Institute urged AIMR to revise the guidelines to provide appropriate flexibility; eliminate seemingly mandatory requirements; and clarify that best execution is not a quantifiable concept and that statistical measurements can be only one part of the overall assessment that firms may make in examining best execution.

Based on comments received on the proposal, AIMR revised the guidelines to reemphasize their voluntary nature. In this regard, AIMR added language to the guidelines that clarify that they are a series of recommendations and not standards.

In addition, AIMR clarified the scope of the guidelines. In particular, AIMR clarified that the guidelines apply to all types of transactions, including transactions in fixed income and derivative securities. However, in response to concerns by commenters that applying the guidelines to these types of transactions may be difficult given the lack of available data for fixed income and illiquid trades, AIMR limited the recommendation to measure the quality of trades to those securities with reliable and readily available comparative data.