The FCA is proposing to allow asset managers to rebundle payments for third-party research and trade execution.

By Rob Moulton, Nicola Higgs, and Charlotte Collins

On 10 April 2024, the FCA published its much-anticipated Consultation Paper on payment optionality for investment research (CP24/7). The Investment Research Review made a series of recommendations in the summer of 2023 to help boost the UK investment research market, which the government committed to taking forward (see this Latham blog post).

Fighting financial crime, protecting consumers’ needs, and bolstering wholesale markets are the regulator’s key priorities for the year ahead.

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

On 19 March 2024, the FCA published its Business Plan for 2024/25, setting out its priorities for the year ahead. While the Business Plan now takes on less significance than it did historically given other publications in circulation such as the FCA’s 3-year Strategy and the Regulatory

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.

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”.

The timetable sets out three tranches of extensive regulatory changes to UK and EU law in 2023 and 2024.

By Rob Moulton, Becky Critchley, Denisa Odendaal, and Dianne Bell

The “Edinburgh Reforms”, a series of announcements made on 9 December 2022 by the Chancellor of the Exchequer (see here), set out the UK government’s reforms to drive growth and competitiveness in the financial services sector. The Reforms build upon the reform agenda that the government is taking forward through the Financial Services and Markets (FSM) Bill and which implements the Future Regulatory Framework Review.