Insight Investment said it supports the Financial Security Assurance’s policy, entitled CP176, to limit the scope for sorting and bundling to execution services and investment research.
Alan Denholm, deputy chief investment officer at Insight said, “We fully support the proposals on soft commission since they will remove a potential conflict of interest that may exist between fund managers and their clients. Insight has not had any soft commission arrangements for any of our institutional or retail clients since negotiated commission arrangements were introduced in 1986. “In addition, we firmly believe that increased transparency of commission usage is good for the industry and investors alike. We support the view that fund managers should be fully accountable to their clients for the expenditure of client funds,” Denholm said.
In April 2003, the FSA released the new policy under which fund managers would no longer be able to incur costs for services additional to dealing without the customer’s express agreement. As a result, managers would have to negotiate with their customers on the price for those services. At that time, the FSA also proposed that managers would no longer be able to use soft commissions to purchase services such as dealing screens. FSA is Europe’s oldest bond insurer, having participated in European capital markets since 1987.