The Financial Conduct Authority has opened a consultation on extending the new payment optionality for investment research to pooled funds. This proposal will allow asset managers to use the new payment optionality that was confirmed for MiFID firms earlier this year, in line with the recommendation made by the U.K. Investment Research Review. We discussed the new rules for MiFID firms in "UK allows bundled payments for third-party research and trading commissions."
The proposals apply to UCITS and AIF managers and residual collective investment scheme operators. Managers who take up the option will need to meet various requirements, including: (i) having a written policy on the approach of joint payments; (ii) establishing a research budget based on the expected amount of third-party research; (iii) having a cost allocation structure among research providers; (iv) assessing the price and value of research periodically; (v) allocating cost of research fairly; (vi) responsibility for operating and administering any research payment accounts; and (vii) investor disclosure.
The deadline for comments is December 16, 2024. If the FCA decides to proceed, it aims to publish any rules or guidance in the first half of 2025.
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