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focus on securing best execution – the problem came from the unintended deflation of research payments.”
Not to mention another factor key which came into play- the diversion between the UK’ s payment structure and other regions, namely the US.
Subsequently, in 2023, Rachel Kent’ s UK Investment Research Review – a report commissioned by the UK government – highlighted the importance of investment research as a crucial element of effective and attractive capital markets, emphasising that more and better research could directly result in better pricing for all companies and, importantly, increased liquidity for the market.
The review officially concluded that unbundling requirements had had“ adverse impacts” on the provision of investment research in the UK and subsequently the UK economy, and also pinpointed unbundling requirements as a potential factor in reducing UK asset managers’ access to global investment research, putting them at a competitive disadvantage on the global scene. Speaking to The TRADE at the time, Mike Carrodus, chief executive of Substantive Research, explained:“ Rachel Kent’ s review focuses on removing enough of the operational burdens to encourage asset managers to take advantage of new rebundling freedoms, but not so much that transparency for asset owners is completely jettisoned.“ The FCA now has the task of preserving this sensitive balance […] asset owners will have to buy into the message that taking on these costs will benefit the investment processes of their asset managers, and by extension the money that they are investing with them.” The review consisted of seven recommendations as to the empirical approach, as well as advising the inclusion of an additional optionality for paying for investment research- ensuring greater access to investment
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