Report on Buyside Best Execution Event & Video Highlights
On Tuesday, August 16, the Senior Executives Group of AMF sponsored an EastCoast/WestCoast event that identified several issues that relate to best execution for asset managers, particularly as it relates to the fixed income securities markets. These issues are written-up as a part of this Weekly Report of the SEG.
Participants in the event included primarily asset managers and dealers in charge of trading and/or compliance at their firms. The event reached over 175 industry professional with approximately 100 participating in The Bond Market Association's New York office, 15 participating in Newport Beach, CA via video conference and 60 conference call participants from other locations in the U.S. and in London.
August 16 Best Execution Video & Audio Highlights
Click on names below for highlights
John R. Gidman, Loomis Sayles (SEG Chairman)
Lee A. Pickard, Pickard & Djinis Video 1 Video 2
Michael L. Wyne, Fischer Francis Trees & Watts
Thomas G. Eady, Thomson TradeWeb
Richard M. McVey, MarketAxess
Matthew D. Frymier, Bank of America Securities with introduction by Joseph W. Sack, The Bond Market Association
August 16 Best Execution Takeaways
- The asset management industry should consider clarifying the elements of fixed income securities best execution duties so that managers can better explain these elements to ultimate investors. Asset managers desire to pursue this task on a partnership basis with dealers.
- Establish a process whereby the Senior Executives Group of AMF ("SEG") could facilitate educational opportunities for regulators concerning the above-mentioned best execution elements.
- Best execution is a fluid standard, according to most industry professionals. Price is a component of best execution along with market conditions, size of transaction, liquidity of the instrument, time of trade, straight through processing capabilities, and value of services.
- Higher best execution standards applicable to asset managers will naturally stimulate competition in the marketplace. Moreover, such standards might help to provide a more clear understanding of dealers' due diligence requirements.
- The growth of transparency and electronic trading in the bond markets has apparently fueled the push to propose clarifying the elements of best execution, but industry professionals suggest that the SEG should also include a consideration of derivatives and bank loans in its best execution initiative.
- Has electronic trading gotten ahead of electronic processing? This question (including whether e-processing is fragmented due to e-trading) is relevant to best execution. Perhaps it could be addressed at this year's BMA Tech Conference.
- Finally, many leaders and attendees are interested in specifics of the follow-up to the above. There seems to be a need to form a committee similar to the asset managers' Swaps Committee. Also, the Dealers Advisory Committee of SEG has offered to serve as a liaison to dealers or BMA's Divisions with regard to any initiative in this area that might be defined by the leadership of SEG.
