DP14/3 The use of dealing commission regime

We have carried out a review on whether further changes are needed to deliver a more transparent and efficient asset management sector for end investors.

Why are we seeking views on this?

We have recently made clarifications and enhancements to our use of dealing commission rules that address our concerns over investment managers’ controls and judgements in this area following our 2012 supervisory work.

This Discussion Paper (DP) reports on our recent supervisory findings and a series of roundtable and bilateral discussions with stakeholders that examined how the use of dealing commission, specifically for the purchase of research, currently functions.

DP14/3 The use of dealing commission regime

Who does this discussion paper affect?

This will interest:

  • Investment managers, including UCITS management companies when carrying on scheme management activity and alternative investment fund managers (AIFMs) carrying out AIFM investment management functions respectively.
  • Customers of investment managers, including:
    • institutional investors, for example retail fund and pension fund trustees
    • retail investors who have investments in retail funds (which may be through a wrapper such as an Individual Savings Account), or who have a direct relationship with an investment manager, for example individuals with discretionary-managed investment portfolios.
  • Brokers (including investment banks), and third party providers of independent research and other ancillary services supplied to investment managers.
  • Relevant trade associations and representative bodies for the above groups.

What are the next steps?

Firms should take steps, where necessary, to ensure their existing practices and systems and controls are adequate to meet our current rules on the use of dealing commission.

You can respond to the questions in this paper by 10 October 2014.

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