British regulators say that they plan to focus on the fairness and transparency of the new issue allocation process, among other issues, in a review of competition in the investment and corporate banking industry.
The U.K. Financial Conduct Authority (FCA) is planning a market study into competition that, it says, will focus on choice, transparency, bundling and cross-subsidization in debt and equity capital markets, mergers and acquisitions, and acquisition financing.
In particular, the FCA says that it will examine the transparency of the allocation process in debt and equity issues, and the impact of both industry practices and regulations on transparency in the IPO process. It also plans to look at client choice and behaviour and the impact of syndication; how bundling and cross-subsidization affects competition; and, the potential benefits of reducing regulatory barriers to firms entering, or expanding, in these markets.
“We want to see a sector that benefits the real economy by helping businesses of all sizes access capital. That means offering real choice, transparency and good service at every level,” said Christopher Woolard, director of strategy and competition at the FCA, in a release. “It is also essential that the regulatory framework encourages competition, and we will engage with banks, advisers, clients and investors throughout the review to assess which aspects of the market work well, and identify areas for improvement.”
The FCA says that it will consult with all aspects of the securities industry, from full service banks to boutiques, corporate clients, and the public, as part of the study. It is seeking industry feedback by June 22, and says that it expects to publish a report setting out the interim findings and any proposed remedies ahead of a final report, which is slated for spring 2016.