Markets and Investments

The FCA found that wholesale data markets can be improved, but has ruled out a significant intervention.

By David Little, Becky Critchley, Oscar Hayward, and Effie Stathaki

The FCA has published the findings of its wholesale data market study (MS23/1.5), which examined competition in the markets for credit ratings data, benchmarks, and market data vendor services. It follows the publication of an Update Report in August 2023, which outlined the FCA’s provisional findings regarding potential

This annual publication explores some of the core focus areas for UK-regulated financial services firms in the year ahead. 2023 saw significant progress on the regulatory reform agenda, and many measures consulted on or reviewed as part of the Edinburgh Reforms will be finalised and/or implemented in the course of 2024.

We also saw the passing of the Financial Services and Markets Act 2023, many provisions of which have already come into effect and have made important changes to the

As the pace of reform increases, we take a look at key developments and the timeline ahead.

Significant progress has been made on the Edinburgh Reforms since they were announced in December 2022, with developments gathering pace before the summer break. Given the breadth and speed of the reforms, now is a good time to take stock of where things stand and what we can expect in the months ahead. In this publication, we highlight some of the key developments and set out expected dates for future progress.

The Review recommends scrapping research unbundling, but also proposes a range of other changes to the UK research landscape.

By Rob Moulton, Chris Horton, Sean Wells, Charlotte Collins, and Johannes Poon

On 10 July 2023, HM Treasury published the final report produced by the independent UK Investment Research Review (Review). The Review was launched on 9 March 2023 to examine the link between levels of research and the UK’s attractiveness as a destination for companies to access capital (please see Latham’s previous blog post for the background to the Review).

The report makes seven recommendations which the government has committed to taking forward. While the recommendation to remove the research unbundling requirements was expected, the Review has taken a more holistic approach and the report puts forward wide-ranging suggestions for improving the UK investment research landscape. The recommendations are summarised below.

UK regulator follows the European Securities and Markets Authority in clarifying the scope of the trading venue perimeter.

By Nicola Higgs and Sidhartha Lal

On 5 July 2023, the FCA published its Policy Statement (PS23/11) containing final guidance on the trading venue perimeter, following its September 2022 consultation on the same matter.

The new guidance will sit in the Perimeter Guidance manual (PERG) of the FCA Handbook, using a Q&A format, and is intended to clarify the regulator’s interpretation of the different elements within the definition of a multilateral system and how it applies to specific types of arrangements in financial markets. The Policy Statement represents the conclusion of the FCA’s assessment of the trading venue perimeter. ESMA conducted an analogous review and published its Final Report in February 2023.

Form 13F filers will need to file their first Form N-PX covering the period of July 1, 2023, to June 30, 2024, by August 31, 2024.

By Stephen P. Wink, Naim Culhaci, Laura Ferrell, Aaron Gilbride, Matthew Lee, and Jacqueline Marie Rugart

Rule 14Ad1 of the Securities Exchange Act of 1934 (Exchange Act), which was adopted by the US Securities and Exchange Commission (SEC) last fall, and will become effective on July 1, 2024, will institute a new requirement for institutional investment managers that are required to file Form 13F pursuant to Section 13(f) of the Exchange Act (13F Filers) to additionally publicly report how they voted via proxy for certain executive compensation matters on Form N-PX. Previously, the requirement to publicly report proxy voting records through Form N-PX was generally limited to registered investment companies.

As the “most ambitious legislative proposal since the inception of EU financial regulation”, the changes would make significant amendments to MiFID II and PRIIPs.

By Rob Moulton, Nicola Higgs, Becky Critchley, Gary Whitehead, and Charlotte Collins

On 24 May 2023, the European Commission (Commission) published a package of proposals to strengthen protections for retail investors within the European Union (EU) and place “consumers’ interests at the centre of retail investing”. The proposals significantly amend the protections afforded to retail clients under MiFID II, and also impact the institutional markets, as discussed below.

The Future Regulatory Framework and Consumer Duty will be key areas of focus for the coming year.

By Rob Moulton, Nicola Higgs, David Berman, Becky Critchley, and Charlotte Collins

On 5 April 2023, the FCA published its Business Plan for 2023/24. The Business Plan sets out a number of priority areas for the regulator, tied into its three main areas of focus: reducing and preventing serious harm, setting and testing higher standards, and promoting competition and positive change.

The FCA highlights four of these priority areas that will receive additional emphasis over the coming year. These priority areas indicate a strong focus on developing the Future Regulatory Framework, including consulting on Handbook Rules to replace elements of onshored EU legislation as well as progressing the Edinburgh Reforms; and on consumer protection, including effectively implementing the new Consumer Duty.

The tone of the Call for Evidence indicates the controversial research unbundling rules could be primed for reform.

By Rob Moulton, Gary Whitehead, and Charlotte Collins

On 3 April 2023, HM Treasury published a Call for Evidence as the first step in the independent review of investment research and its contribution to the competitiveness of the UK’s capital markets.

The review has the stated key objectives of:

  • Assessing the link between levels of research and the attractiveness of the UK as a destination to list
  • Evaluating options to improve the UK market for investment research and to provide recommendations to this effect

The review was announced as part of the Edinburgh Reforms in December 2022. The Chancellor noted at the time that “the review is part of the government’s wider commitment to enhance the UK’s ability to attract companies to list and grow”.

Monitoring the progress of the Financial Services and Markets Bill and regulatory divergence between the UK and the EU will continue as a key theme in 2023. 

The Financial Services and Markets Bill leaves a significant amount of the essential regulatory detail to be developed later by HM Treasury (through regulations), followed by development of the specific rules by the regulators. Therefore, firms operating in the financial services sector will face legal and regulatory uncertainty as to the UK’s regime