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  Market Timing: Guidelines for Managers of Investment Funds

By Paul Cummins FCCA AITI MSc.Multimedia Systems 15 November2004

Market Timing in the UK

The UK Investment Management Association (IMA) in October 2004 issued “Market Timing: Guidelines for managers of investment funds”.The guidelines detail the regulatory tools available to investment fund managers and give guidance on supervisory structures which will assist managers in deterring and dealing with market timing activity.

The guidelines are an extension of “Market Timing. A technical discussion paper” which was published in December 2003 as a response to the FSA's investigation into possible market timing and arbitrage activity in the UK . Positive feedback on this paper from both the industry and the FSA indicated a clear need to expand it into more formal guidelines for managers of unit trusts and OEICs.

There are a number of graphics on the website in the Financial Services Regulation section,depicting the market timing scandals in the US.

The guidelines take into account new regulations which came into effect as a result of “CP185: The CIS Sourcebook – A new approach”, namely fair value pricing and dealing cut off points. As part of this process, IMA in conjunction with the Depositary and Trustee Association², has also issued more detailed guidelines on Fair Value Pricing. Richard Saunders, Chief Executive of the IMA commented:

“The industry was encouraged by the FSA's findings that, in contrast with the situation in the United States , there is limited evidence of market timing in the UK investment funds industry. Nevertheless it is important to ensure that investors are protected against such practices in the future. These new guidelines, which have been drawn up after widespread consultation within the industry, will help to ensure this.”