We welcome the Chancellor’s Mansion House speech and will work closely with the Treasury to support the proposals announced by the Chancellor.

Our Business Plan this year highlights our commitment to a range of work designed to strengthen the UK’s position in global wholesale markets and putting consumer needs first. We have already taken significant steps to support UK capital markets and will continue to build on that strength in the months ahead to support the reforms announced today.

The Investment Research Review

The FCA supports high regulatory standards in the UK and aims to make sure our capital markets are dynamic and effective for all participants.

The FCA will carefully consider Rachel Kent’s report and its recommendations, in line with our objectives. We will start engaging immediately with market participants. This engagement will inform the content of any consultation proposals. Subject to that feedback, we intend to consult on an accelerated timetable on potential regulatory changes that could introduce more options on how to pay for investment research so as to achieve an outcome of improving investor research into markets while providing value for money to institutional and retail investors.

The FCA will also take feedback from the market on the timing of any rule changes, driven by market need and firms’ operational capacity to absorb changes. Subject to this detailed consultation feedback and FCA Board approval, we will aim to make relevant rules in H1 2024.

Pending any regulatory reform, we are open to consider swift actions, if needed, to support firms impacted by changes to regulation in other jurisdictions, based on discussion with individual firms or parts of the market.

Source: FCA

AFME welcomes UK Government reversal of MiFID ban on free research for clients

In response to the UK Government’s publication of its Investment Research Review, including the announcement that it will reverse the EU MiFID II ban on free research for clients, Adam Farkas, CEO of the Association for Financial Markets in Europe (AFME) commented:

“AFME members are supportive of the UK Government’s approach to the provision of investment research which allows for more flexibility in that clients will have the option to choose how they pay for the research they consume, whether bundled or unbundled, by removing the requirement on market participants to unbundle which is currently contained in the EU’s MIFID II legislation.

“It should also be noted that the investment research market is inherently international and further changes to the UK’s regulatory and legislative environment in this area should prioritise, where possible, alignment with other jurisdictions. It should also provide a level playing field for both UK providers and consumers of research competing with international counterparts. AFME notes that similar themes are being addressed in ongoing discussions by other policymakers, and it is important for the respective UK initiatives to take account of developments in other jurisdictions such as the US and EU.

“From our own analysis, AFME has found no evidence to support a causal link between the introduction of the unbundling rules and the pre-existing declining trend in SME research coverage. Among the numerous surveys and reports AFME has conducted on this topic, no respondents have identified the unbundling regime as a causal factor in declining SME coverage.

“Noting the UK IRR proposals on a new research platform and a pre-public offering arena, we will be interested in assessing the scope and objective of such new infrastructures and their impact on UK financial markets and its users.”

Source: AFME