AFME Response to CP 24/21: Investment Research Payment Optionality for Fund Managers

17 December 2024

AFME welcomes the FCA proposal to cater for investment fund managers. This will ensure that all consumers of research are treated the same and will allow firms to apply rules consistently across the franchise, ...

Questions
1.
Do you agree with our proposals to permit fund managers to purchase investment research with joint payments? Yes, No, No view
As stated in our previous response to CP 24/7, AFME welcomes the FCA proposal to cater for investment fund managers.
This will ensure that all consumers of research are treated the same and will allow firms to apply rules consistently across the franchise, which will likely encourage take up of the new option and enable the UK to be more competitive internationally.
2. Are you likely to take advantage of the proposed new payment option for investment research? Yes, No, No view
Competition law prevents AFME members from discussing this.
Each individual member would need to consider whether to offer the option, based on its own community of clients and client relationships.
3. Are there any features of the proposed payment option and associated guardrails which would positively or negatively impact the take up of joint payments ? Yes, No, No view
We support The Investment Association’s view that fund-level budgeting does not take into consideration the way research is typically procured, with budgeting usually set at firm or strategy level (because research is undertaken by portfolio managers for a mix of accounts). Requiring fund- level budgets is likely to leave the UK with a significant extra burden versus international peers and act as a substantial (potentially an absolute) barrier to fund managers taking up payment optionality. This would, in our opinion, also render changes made for segregated mandates largely moot as...

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