On 18 October 2016, the Financial Conduct Authority ("FCA") published the final findings of its investment and corporate market study.
The final report found that, whilst many clients feel well served by primary capital market services, there were some areas where improvements could be made to encourage competition, particularly for smaller clients.
The FCA's final report outlined a package of remedies, including:
- Banning banks from using contractual clauses that seek to limit clients' choice on future transactions.
- Ending league table misrepresentation in banks' pitches to clients.
- Removing incentives for loss-making trades to climb league tables.
- A supervisory programme to address the issue of allocations of shares in IPOs, which are at times skewed towards buy-side investors from whom banks derive greater revenues from other business lines. As well as reviewing allocation policies, the FCA will work with firms to ensure that principles of compliant policies are embodied in allocation practices.
In a discussion paper published at the same time as the interim investment and corporate banking report DP16/3 (which focused on the availability of information in the UK equity IPO process), the FCA proposed changes to the IPO process, and a separate consultation paper on these changes is expected in winter 2016/2017.
The FCA's final report can be accessed here:
https://www.fca.org.uk/publication/market-studies/ms15-1-3-final-report.pdf
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