PS25/4: Investment research payment optionality for fund managers

Read PS25/4 (PDF)[2]

Why we are changing

We are taking forward recommendations from the Investment Research Review[3] and feedback to our consultation (CP24/21[1]).

The final rules will:

• Promote effective competition in the interests of investors.
• Secure an appropriate degree of consumer protection.
• Enhance the competitiveness of UK fund managers.

Who this is for

Our final rules will affect:

• UK undertakings for collective investment in transferable securities (UCITS) management companies.
• Full-scope UK alternative investment fund managers (AIFMs).
• Small authorised UK AIFMs and residual collective investment scheme operators.

The rules might also be of interest to:

• Depositaries of authorised funds or alternative investment funds.
• Investment platforms.
• Financial advisers.
• Investment consultants.
• Investors in authorised funds or alternative investment funds.

Next steps 

We have implemented rules allowing fund managers to pay for research with a joint payment option.

Firms that decide to take up the joint payment option should familiarise themselves with our final rules on joint payments in COBS 18 Annex 1[4] and relevant rules in COLL[5] for authorised funds.

Background

In 2023, the UK Investment Research Review recommended several measures to improve the investment research market.

To take forward the recommendation, we introduced a joint payment option for MiFID firms, including those managing segregated investments.  

CP24/21[4] proposed changes to the existing rules, allowing fund managers to pay for investment research using a joint payment option for research and execution services, subject to a set of guardrails. This joint payment option for fund managers is based on the rules introduced for MiFID investment firms.