The purpose of this modification is to level the playing field for smaller asset managers, who occasionally have difficulties with operational complexity. The existing regulations also limit the ability of UK asset managers to purchase investment research that is created outside of the country.

Consequently, the FCA collaborated with stakeholders on both ends of the investment cycle to provide equitable recommendations. The FCA conferred with research suppliers and end investor representatives in addition to comprehending the perspectives of the buy-side and sell-side parties. As a result, it developed an extensive study of buy-side companies in order to gather quantitative data that would inform its modifications.


After carefully evaluating the input it gets, the FCA hopes to provide final guidelines in the first half of 2024. However, the timeline will depend on the volume, quality, and scope of the data received during the consultation. It will also keep working on the other pertinent suggestions from the independent Investment Research Review in collaboration with government partners.

Establishing a competitive environment

Improvements to UK markets were recommended by an independent assessment on investment research as part of the government's Edinburgh reforms.


The greatest method to foster a healthy environment for the industry is to ensure competition in the UK investment market, and the FCA has consequently suggested new strategies to do this. Asset managers in the UK will now have more options when it comes to funding research. Consequently, this will also lead to better investing choices.


A robust, dynamic capital market depends on easily accessible, high-quality investment research, according to Sarah Pritchard, executive director of FCA's markets and international division. It backs the choices that investors make.

"Our proposal aims to enhance competition and facilitate cross-border research acquisition by offering additional funding alternatives for this type of study."

The proposed "bundling" of payments for trade execution and third-party research will benefit companies of all sizes. This would be in addition to the current options. For instance, money from a specific account or from the assets manager's own funds.
 

The revised plans facilitate asset managers' ability to purchase research in a uniform manner across international borders by being compliant with regulations controlling research payments in a number of other significant jurisdictions.