The U.K.’s Financial Conduct Authority (FCA) is expanding its policy of allowing firms to once again bundle payments for investment research and trade execution to pooled investment funds.
In July, the FCA adopted rules to allow institutional investors to pay for research and trading in combined payments, reversing the regulator’s previous efforts to curb conflicts of interest by requiring firms to pay for research directly.
Now, in response to industry lobbying, the FCA is proposing to extend the new policy on paying for research to the managers of pooled investment funds, subject to certain limitations.
“Asset managers for pooled investment funds will be given greater flexibility in how they pay for investment research, making it easier to buy insight and analysis across borders,” the regulator said in a release on Tuesday.
Additionally, the FCA is proposing new transparency rules for bonds and derivatives markets that aim to “give investors more information and reduce costs for firms.” It’s also establishing a consolidated tape for bond trading data.
Those proposals, which would take effect in December 2025, would expand the types of orders and transactions that are subject to transparency requirements; revise pre-trade transparency trading protocols; change reporting thresholds and exemptions from reporting requirements; and alter the content of post-trade reports.
“Our expectation is that the UK’s new bond and derivative transparency regime will support price formation and best execution while protecting the ability of liquidity providers to hedge the risk they take when dealing in larger sizes, which will ensure their ability to continue offering liquidity in this way,” noted the consultation paper on the FCA’s proposals.
“This, combined with the simplification and cost reduction that the new rules represent versus existing regime, will support the growth of these markets in the UK,” it added.
The FCA said these measures are part of its broader effort to strengthen wholesale financial markets.
“We want UK markets to be efficient and to support economic growth. Putting more information in the hands of investors and giving investment firms greater access to research to inform their strategies will bolster UK markets,” said Jon Relleen, director of supervision, policy and competition at the FCA, in the release.
“We want to seize opportunities to enhance and streamline our rules and support the competitiveness of sectors in which the UK is already a recognized world leader,” he added.