FSA renews pressure on equity research
UK regulator the FSA has given the fund management industry the opportunity to devise its own more transparent system of client commissions. But there is an impending time limit, and a crucial area - the creation of a competitive marketplace for research - is proving a recalcitrant problem.
THE UK'S FUND managers, brokers and pension funds are becoming increasingly concerned about the opinions of the UK's Financial Services Authority as a deadline set by the regulator looms closer.
The FSA's December cut-off for the industry to have shown progress towards greater transparency and disclosure in execution services and research, and for the emergence of a truly competitive marketplace for research, is fast approaching. The FSA has threatened to respond to poor performance by imposing regulation.
Although the industry has made progress in transparency and disclosure, when it comes to research its proposed solution does not appear to meet the FSA's desire to see a competitive market. In a supplementary policy statement to be released this month, the FSA is set to harden its stance by encouraging fund managers to pay for research with their own cash rather than through clients' commissions.
In a response to Euromoney the FSA says of its intentions, which will be outlined later this month: "Our publication in November will make it clear that we have not lost any steam, quite the contrary. The changes which we are putting in place will, we believe, encourage the development of separate prices for execution and research, and will make it easier and more attractive for fund managers to pay for research with hard cash rather than dealing commission.