Responding to the FCA’s consultation on payment optionality for investment research, AFME has warned that the association’s proposed approach risks misalignment with other financial centres.
While sharing the opinion that an optimal regime for investment research payment optionality grants buy-side firms the flexibility to decide how they obtain and purchase research, AFME has shared its concerns on the proportionality and workability of the FCA’s proposed framework.
The association stated that the framework has unnecessary operational complexity, which it believes would make the UK take a “significantly different” approach to other financial centres.
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AFME’s primary area of concern centres around the FCA’s proposed guidelines, which it says are more detailed than those required in the US or under MiFID in the EU. If these are adopted, it warns, firms may be deterred from using the new payment optionality and increase cross-border frictions.
Adam Farkas, AFME CEO, commented: “AFME supports the principle of payment optionality. However, the FCA’s proposed framework may not be optimal because it is not sufficiently flexible compared to existing structures or structures available in other jurisdictions.
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“Overall, our view is that the proposed regime would not underpin the Government’s wider commitment to enhance the UK’s ability to attract companies to list and to grow. While we support the FCA’s accelerated timeframe for this policy file, it is equally important that appropriate time is taken to consider industry feedback and that the regime delivers on the intended outcomes.”
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