The UK’s financial conduct authority (FCA) has implemented new rules allowing fund managers to pay for research with a joint payment option.
Previously, the FCA had introduced a joint payment option for Mifid firms (including those managing segregated investments) in 2023 – following recommendations from the UK ‘investment research review’ recommended several measures to improve the investment research market.
Following this, proposed changes to the rules were suggested by various players across the industry – with proposals focused on allowing fund managers to pay for investment research using a joint payment option for research and execution services.
This update securing joint payment options for fund managers is subsequently based on those rules introduced for Mifid investment firms.
Speaking to the TRADE, Mike Carrodus, chief executive of Substantive Research, explained: “Now that buy-side firms can budget for research at a strategy level, the group that are motivated to transition over to CSA-funded research will expand materially.
“The next question will be how quickly they can move across, with a small group getting it done by the end of the year and a much larger contingent now targeting 2026.”
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The final rules on the investment research payment optionality for fund managers are aimed at improving the research market as a whole, the watchdog said.
The decision has come off the back of recommendations from the ‘investment research review’ and is set to promote effective competition, ensure increased consumer protection, and enhance the competitiveness of UK fund managers.
Read more – EU and UK Investment Research Reviews: Convergence is paramount
Those affected by these new rules include: UK undertakings for collective investment in transferable securities management companies, full-scope UK AIFMs, and small authorised UK AIFMs, as well as residual collective investment scheme operators.