The UK Financial Conduct Authority (FCA) has released its final rules on payment optionality for investment research, aiming to improve market competition for the benefit of investors. Substantive Research’s Mike Carrodus talks to Global Trading about what the latest changes mean.
The final element of the package is a consultation outlining proposals for derivatives trading obligations, which the FCA says will improve secondary market regulation, reduce systemic risk and minimise disruption to firms.
Following consultations, the FCA has made a number of significant changes to the conditions attached to using the new payment option, it stated. Operational efficiency and adaptability for different types of firms is a priority, it noted, however ensuring an appropriate degree of protection for consumers is also vital to prevent “a return to historical poor practice”.
Mike Carrodus, CEO of Substantive Research, acknowledged that feedback has been taken into consideration. “There have been tweaks to the original consultation paper that show that the FCA has listened. But the fact is, they’re still very committed to the guardrails that they put into the original document. As far as they’re concerned, these ensure that there’s protection for end-investors if costs do return to them,” he told Global Trading.
Carrodus continued: “Something that jumped out at me was the clarification that there wasn’t a stipulation to budget at a strategy level. That was a clear area of focus from our clients after the consultation paper mentioned strategy level budgeting; these new rules have said, ‘you can budget at a level appropriate to your investment process and client base.’ That’s really important.”
Sarah Pritchard, executive director of markets and international at the FCA, commented: “We have engaged extensively and broadly in developing the final set of rules to support a thriving investment research market. We are also setting out key reforms to the prospectus regime, and welcome engagement from the sector so that we can get the balance right before deciding the final regime.
“Putting the right information in the hands of investors and removing unnecessary costs will help further bolster the market.”
©Markets Media Europe 2024
