Administration April 11, 2002

AIMR Issues Execution Best Practices Guidelines

November 16, 2001 (PLANSPONSOR.com) - The Association for Investment Management and Research (AIMR) has released proposed Trade Management Guidelines in order to establish recommended best practices for trade execution.
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The guidelines define best execution as “well-informed trade execution decisions made with the intention of maximizing the value of client portfolios under the particular circumstances at the time”.

The AIMR Trade Management Guidelines outline more than 20 best execution practices in three areas:

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  • trade policies and processes, 
  • disclosures, and 
  • recordkeeping.

For example, the guidelines recommend, that investment management firms:

  • establish a trade management oversight committee, 
  • implement a trade measurement process that assesses the costs and quality of trades, 
  • develop guidelines for broker selection and exploration of alternative trading venues, 
  • establish controls to monitor broker performance and measure execution quality, 
  • disclose details on order-routing practices and conflicts of interest involved in the trading function, and
  • document the firm’s efforts to achieve best execution.

The group is also inviting public comment. The public comment period is scheduled to last 90 days, through February 12, 2002. Comments received will be posted on the AIMR Web site.

The AIMR task force, made up of 15 trade-execution experts from investment management firms, brokerage houses and consulting firms, will review all comments and make final recommendations to the AIMR Board of Governors.

The final guidelines are expected to be issued in May 2002.

View the guidelines at www.aimr.org

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