News Flash- ICI Calls on Funds, Brokers To Work in Cooperation
September 27, 2004
NEW YORK -- Elizabeth Krentzman, general counsel of the Investment Company Institute, called on the fund industry to cultivate a better relationship with the brokerage community to tackle the many issues facing the interrelated businesses. She made the remarks at the ICI's Equity Markets conference here last Thursday.
Krentzman said the two sides need to create a better working relationship in order to find mutually acceptable solutions to pending proposals for point-of-sale disclosure and revenue-sharing arrangements, as well as on issues such as soft dollars and directed-brokerage agreements, among others.
"After all, brokers are the vehicles through which our members purchase a large portion of the securities for their funds' portfolios," she said. "In addition, a considerable amount of fund shares are sold through brokers." Krentzman said the ICI also looks forward to working with the Securities and Exchange Commission's division of market regulation on these topics.
Krentzman further commended the SEC on its "unprecedented series of regulatory reforms impacting mutual funds," especially the soon-to-take-effect compliance mandates. The "far-reaching" new rules, which are set to take effect on Oct. 5, "will have a significant long-term impact on the oversight of fund operations and related compliance activities," she said.
Echoing sentiments of several ICI and industry figures in the past year, Krentzman hammered home the importance of fiduciary responsibility. "In order to sustain the confidence and trust of our investors, the mutual fund industry must dedicate itself to fulfilling its obligations as fiduciaries. A vigorous and successful compliance program is an essential part of this proposition," she said.
Krentzman said the ICI has committed to establishing a committee comprised of chief compliance officers to give them a forum to interact with their peers, share their perspectives and learn more about industry compliance practices.
Furthermore, Krentzman said that the ICI continues to take an active role in the development of regulatory initiatives to modify the structure of the securities markets to ensure a well-regulated, highly competitive and efficient market. It is also examining the SEC's proposed Regulation NMS. "We believe the SEC must focus its efforts on the core principles of a national market system: efficiency, competition, price transparency and the direct interaction of investor orders," she said. "We are hopeful that the SEC will seize upon the current debate to undertake long-overdue reforms."