Fund managers worried about how to relate to brokers will have a blueprint document to guide them through the complexities of contractual dealings that could end years of argument over their respective responsibilities.

The original request for a blueprint in cash markets covering equity and fixed-income dealings came from fund managers belonging to the Investment Management Association more than four years ago.

But the arrival of Mifid, the European marketing and financial instruments directive, bringing in new regulations, has added more urgency to the need.

“Fund managers said the blueprint was more necessary than ever,” said Jane Lowe, director of markets at the industry body, which had been waiting for the directive to come into action before publishing recommended terms of business.

Brokers and fund managers often do not understand each other’s business and language, she said.

Both sides tend to have their own set of terms that can develop into “a battle of the forms”.

Robert Jenkins, IMA chairman, said: “All too often our contractual dealings with the brokerage community have been shaped by the brokers themselves with scant reference to our clients or ourselves.”

Fund managers are often concerned about liability and the protection for clients if something goes wrong in their dealings with brokers. “In drafting and negotiating their own terms of business the sell side has sought to shift maximum liability to the investment manager,” said Mr Jenkins.

The blueprint seeks to outline the duties of fund managers and brokers on issues such as liability, broker conflict of interest over the use of client information and getting good quality execution from brokers.

“Brokers are not keen to accept the IMA’s model terms,” said Ms Lowe. But they have indicated that they are willing to discuss the issues tackled in the document.

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