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FCA Proposes New Options for Asset Managers to Pay for Research

FCA investment research
© A Perry

The Financial Conduct Authority (FCA) is shaking things up in the way UK asset managers pay for investment research. While the FCA found that current rules ensure managers get the research they need, they also acknowledge the system’s shortcomings.

The current options can be cumbersome for some firms, particularly smaller asset managers, and restrict access to research produced outside the UK.

To address these issues and support better investment decisions, the FCA is proposing more freedom in how research is paid for. This includes allowing the bundling of payments for research and trade execution alongside existing methods like direct payment or dedicated research accounts.

This new approach aligns with research payment rules in other major jurisdictions, making it easier for UK asset managers to access research globally in a consistent manner.

The FCA’s decision comes after extensive consultations with market participants, including research providers, investors, and asset managers. They considered written analysis and conducted surveys to gather data before proposing these changes.

The FCA aims to finalise the rules in the first half of 2024, but the timeline depends on the feedback received during the consultation process. They will also continue working with the government to implement other recommendations from the independent Investment Research Review.