FCA publishes the final report of its investment and corporate banking market study
18 October 2016
The final report confirms the findings of the interim report published in April 2016. It finds that whilst many clients feel well served by primary capital market services there were some areas where improvements could be made to encourage competition, particularly for smaller clients.
The Financial Conduct Authority (FCA) has published the final findings of its investment and corporate banking market study and set out a targeted package of remedies to ensure effective competition in the market.
The FCA’s final report outlines a targeted package of remedies, including:
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Banning banks from using contractual clauses that seek to limit clients’ choice on future transactions. The FCA has published a separate consultation paper alongside this final report setting out the proposals. Depending on the responses to the consultation paper, the FCA expects to publish the final rules in early 2017.
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Ending league table misrepresentation in banks' pitches to clients: banks routinely present league tables to clients in a way that inflates their own position. The FCA is working with the BBA and AFME so that they can develop and adopt industry guidelines to improve the way such information is presented.
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Removing incentives for loss-making trades to climb league tables: league tables that rank investment banks can be misleading because some banks carry out loss-making transactions purely to generate a higher position in such tables. The FCA has asked league table providers to review their recognition criteria so as to reduce the incentives for banks to undertake such league table trades.
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Supervisory programme for initial public offering (IPO) allocations: allocations of shares in IPOs are at times skewed towards buy-side investors from whom banks derive greater revenues from other business lines (for example, trading commission). In the run up to the implementation of MIFID II, the FCA will work with those firms where shortcomings in their allocation policies or practices have been identified.
In a separate discussion paper published at the same time as the interim report, the FCA proposed changes to the IPO process. The consultation period closed in July and the FCA expects to publish a separate consultation paper on changes to the IPO process in winter 2016/17.
Press release
Final report
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