FS15/1: Discussion on the use of dealing commission

This paper reports on the main issues arising from Discussion Paper DP14/3: Discussion on the use of dealing commission regime, and sets out next steps.

Why are we publishing this paper?

Dealing commission – the charges paid by consumers when investment managers execute trades and acquire external research on their behalf – is worth around £3 billion a year. In July 2014 we published a discussion paper as part of our work looking at the way investment firms use dealing commission, and examining the wider market for research. This feedback statement:

• Forms part of our broader focus on wholesale conduct.
• Summarises responses received to our competition and policy analysis of potential reforms to our current dealing commission regime linked to proposals under MiFID II.
• Sets out our views on further developments in EU discussions and next steps.

FS15/1: Feedback statement on DP14/3 [PDF][1]

Who should read this paper?

• 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
• Corporate issuers
• Relevant trade associations and representative bodies for the above groups

What are the next steps?

We will publish further information, including a consultation on our overall implementation of MiFID II, by late Q4 2015.

Find out more:

• DP14/3 Discussion on the use of dealing commission regime[2] (July 2014)
• CP13/17 Consultation on the use of dealing commission rules[3] (November 2013)
• PS14/7 Changes to the use of dealing commission rules: feedback to CP13/17 and final rules[4] (May 2014)
• FSA Report: Conflicts of interest between asset managers and their customers: identifying and mitigating the risks[5] (November 2012)
• Martin Wheatley speech, ‘Shaping the Future in Asset Management’, FCA Asset Management Conference[6] (October 2013)