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Compliance Monitor

Post-Brexit 'bundling' proposal for asset managers to fund research hastened through

Asset managers are on course to be given a third option on how they pay for investment research, following an FCA decision to let them bundle together payments for third-party research and trade execution. The final rules are due to be produced by the end of June, only 25 days after a 5 June deadline for submissions to be made on the change to the regulator.

At the moment, asset managers must either pay for research directly themselves or agree separate research charges with each client. The third possibility was recommended in July as part of the Government-commissionedIndependent Research Review, chaired by Rachel Kent. This route had previously existed but led to concerns about opaque charging structures and was ended in 2018 when the Markets in Financial Instruments Directive was revised. The about-turn has been made possible by Brexit, and is justified by the Financial Conduct Authority in two different ways - the restrictiveness of the current options, as well as safeguards for the proposed third route.

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