The settlement between Merrill Lynch and New York state is greatly encouraging, but the investment community needs to do more to create an environment that fosters objective research, according to Tom Bowman, president and CEO of the Association for Investment Management and Research.

“I am hopeful that other firms will voluntarily follow Merrill Lynch in making these critical changes to create a research environment that clearly encourages and rewards independent, objective, accurate, honest, and thorough research,” Bowman wrote in a letter to all AIMR members yesterday.

Beyond the Merrill Lynch settlement, there is more work for all market participants to do, Bowman said. New standards are needed that will be applicable worldwide, not just in the U.S., he said. In addition, standards are needed to deal with pressures on analysts to be biased that come from institutional investors and corporate issuers, he said.

AIMR plans to soon issue for public comment “Research Objectivity Standards” that will deal with these additional matters and encourage voluntary adoption, Bowman said. “We believe that these proposed standards will expand upon those currently enacted by the NYSE/NASD or other regulatory bodies,” he said.

“Only with the collective efforts of all market participants who have a vested interest in quality research can we create an environment where firms who sell or provide research to investing clients will compete as much on the objectivity, quality, and accuracy of their research as they do on other factors.”