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IMA publishes market timing guidelines for managers of investment funds
The Investment Management Association (IMA) has published "Market Timing Guidelines for Managers of Investment Funds". The objective of the Guidelines is to provide members with suggestions for a robust and demonstrably reasonable control framework that will give them, and the investors in their funds, comfort that managers are taking all reasonable steps to help ensure that funds are being protected from the activities of market timers. Market timing generally refers to a trading strategy in open-ended funds, often coupled with frequent purchases and sales of units/shares, with the intention of dealing on prices that do not fully reflect market information. Market timing in the Guidelines describes two distinct activities, arbitrage and short-term trading.
The Guidelines deal with issues such as (i) appropriate supervisory structure; (ii) identifying market timing; (iii) addressing market timing; (iv) reducing the attractiveness of funds for market timing; and (v) deterring identified market timers. The Guidelines are not intended to set out a minimum standard of conduct for managers, and their adoption would not necessarily represent any form of safe harbour under FSA rules.
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