ICI Comments to European Regulatory Committee on Investment Manager Arrangements

Washington, DC, February 15, 2007 - The Institute submitted a letter to the Committee of European Securities Regulators (CESR) that addresses soft-commission and bundled-brokerage arrangements used by investment managers.

Background
CESR is an independent committee of European securities regulators that seeks to:

improve coordination among European securities regulators,
act as an advisory group to assist the European Commission, and
work to ensure more consistent and timely implementation of community legislation in the EU member states.

ICI's letter responds to CESR's public consultation on the treatment of "inducements" provided to or by investment firms under the Markets in Financial Instruments Directive (MiFID).

ICI Position
The Institute's letter urges CESR to recognize that soft commission and bundled brokerage arrangements can be effectively managed and that allowing investment managers the flexibility to use these arrangements proves consistent with the requirements of Article 26 of the MiFID. The letter provides a qualified endorsement of a common supervisory approach with respect to regulations that limit the types of services that can be obtained with soft commissions. The letter also expresses concern about any approach that would require investment managers to provide "unbundled" disclosure of bundled commissions, and urges CESR to not to adopt that approach.

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