FCA Proposes Unbundling Research From Dealing Commission

SS
Shearman & Sterling LLP

Contributor

Our success is built on our clients’ success. We have a long and distinguished history of supporting our clients wherever they do business, from major financial centers to emerging and growth markets. We represent many of the world’s leading corporations and major financial institutions, as well as emerging growth companies, governments and state-owned enterprises, often working on ground-breaking, precedent-setting matters. With a deep understanding of our clients' businesses and the industries they operate in, our work is driven by their need for outstanding legal and commercial advice.
The FCA published a discussion paper on how firms use dealing commission, the charges paid by consumers for executing trades and conducting external research.
United Kingdom Finance and Banking

On 10 July 2014, the FCA published a discussion paper on how firms use dealing commission, the charges paid by consumers for executing trades and conducting external research. The FCA recently conducted a review of the use of dealing commission relating to the controls and oversight of an investment manager when acquiring research from brokers in return for client dealing commissions, resulting in changes to its rules which came into effect on 2 June 2014. The FCA considers that further work on the use of dealing commissions is needed to improve price transparency in the market for research as well as improve the controls investment managers have over the use of dealing commissions and the potential conflicts of interest for investment managers acting as agents for their customers. The FCA is proposing that unbundling research from dealing commissions is required to address these issues and that, to be most effective, it should be on an EU-wide basis. The FCA notes that the ESMA consultation paper on their advice under the Markets in Financial Instruments Directive II (known as "MiFID II") indicates that the same unbundling approach is advocated by the European authority.

The FCA discussion paper is available at:

http://www.fca.org.uk/static/documents/discussion-papers/dp14-03.pdf.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Mondaq uses cookies on this website. By using our website you agree to our use of cookies as set out in our Privacy Policy.

Learn More