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research for retail investors.
Speaking at the time, Jeremy Hunt, then Chancellor of the Exchequer, said:“ The government welcomes Rachel Kent’ s excellent Investment Research Review( IRR) published today and has accepted all recommendations made to it.
“ We therefore welcome the FCA’ s commitment to start immediate engagement with the market to inform any rule changes on removing the requirement to unbundle research costs by the first half of next year.”
And so, it began.
We’ re all in this together After the IRR was laid out, plans were put in motion for change, with a consultation release by the FCA on the notion of payment optionality in April 2024- specifically joint payments for Mifid firms. This became a reality just three months later with the reintroduction of an optional element of rebundling. Under the new proposed payment option, the UK buy-side were able to facilitate joint payments for third-party research and execution services, provided these firms met set requirements.
“ They [ the FCA ] have made changes in a few areas which definitely increase the likelihood of the buy-side being tempted to try to get these costs off their own P & Ls and potentially become more open to consuming new research,” Carrodus told The TRADE at the time.“ For example, many interpreted the proposed rules in the consultation paper as requiring‘ strategy level budgets’ which would have been a dealbreaker for some asset managers- this has been clarified and removed. Allocating a budget down to individual teams is common practice, but for some asset managers who consume and repackage research insights centrally this would not have been an option.” Notably, the FCA’ s new rules also meant that firms were not obligated to disclose their top providers in terms of payment amount – a direct result of feedback from participants in the consultation – and instead provide a breakdown of types of providers in the budget. The new rules also included a more relaxed approach in how firms ensure research charges versus execution
30 // TheTRADE // Q2 2025