The Financial Conduct Authority (FCA)
has put forward plans for a new way to pay for investment
research.
Analysis by the FCA shows that asset
managers are largely getting the research they need under the
current rules.
However, the current options available
to UK asset managers can be operationally complex and may, in
some instances, favour larger asset managers. The current rules
can also restrict UK asset managers' ability to buy investment
research produced outside the UK.
As part of the government's
Edinburgh reforms,
an independent report on investment research suggested ways to
improve UK markets.
Now the FCA has proposed giving asset
managers greater freedom in how they pay for research, supporting
their investment decisions. This greater choice should suit firms
of varying business models and sizes, helping to promote
competition.
It will allow the ‘bundling' of
payments for third-party research and trade execution, and would
exist alongside those already available, such as payment from an
asset manager's own resources or from a dedicated
account.
The new plans are also compatible with
rules governing research payments in certain other major
jurisdictions, making it easier for asset managers to buy
research in the same way, across
borders.
Sarah Pritchard, Executive
Director, Markets and International, at the FCA
said:
“High quality, easily accessible
investment research is a vital part of a healthy, dynamic capital
market. It supports the decisions investors
make.
“We are proposing to provide more
options on how to pay for such research, helping boost
competition and making it easier to buy research across
borders.”
The FCA has engaged extensively with
sell-side and buy-side firms, as well as research providers and
representatives of end investors, reviewed written analysis,and
has conducted a detailed survey of buy-side firms to collect
quantitative evidence before announcing its
proposals.
The FCA aims to produce final rules in
the first half of 2024, after carefully consideringthe feedback
it receives, but the timetable will be determined by the amount,
strength and breadth of the information gathered in the
consultation.
The FCA will continue to work with
government partners on the other recommendations relevant to it
made in the independent Investment Research Review.
Notes to Editors
- Read the consultation here .
-
Comments on the proposals should be
sent to the FCA by 5 June 2024.
