UK regulator says asset managers should be able to pay for ‘bundled’ research and trading fees
Asset managers should be able to pay for their investment research alongside fees for trading, the UK market regulator has proposed, reversing a long-standing policy in an effort to energise the UK’s capital markets.
The Financial Conduct Authority on Wednesday said fund managers should be able to “bundle” fees for investment bank research with their trading costs after a review of the controversial practice. Its proposal would row back on an important plank of Mifid II, the EU’s post-2008 financial reforms package, and spearheaded by London’s politicians and regulators. Although the rules were intended to clamp down on conflicts of interest and boost more independent coverage, they led to even less coverage of small and medium-sized stocks.
After the UK left the EU, some politicians and Westminster think-tanks encouraged the UK to ditch the rules. EU officials are also rolling back their investment research rules. Last year, UK chancellor Jeremy Hunt said he would encourage more research on small and medium-sized companies and entice more businesses to list in London.
“It is ironic that this is probably going to be positioned as a post-Brexit freedom but we were the ones that pushed this on to the Europeans, we drove this,” said Mike Carrodus, founder of Substantive Research, an investment research analytics company...
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