In July 2014 the FCA launched its wholesale sector competition review with a call for inputs – see Regulatory Roundup 57 for further details.
The review of feedback ended in February with investment and corporate banking being identified as areas where competition may not be working effectively and “would benefit from further investigation” which in turn has prompted a market study on these areas. The Investment and Corporate Banking study will focus on:
- Choice of banks and advisers (particularly for smaller clients);
- Limited transparency (which will take in adequacy of information, allocation process and the IPO process);
- Bundling and cross-subsidisation (both the extent of occurrence and the effect on competition and clients)
The FCA has now issued the study’s Terms of Reference. Page 13 shows, in diagrammatic form, the activities which will, and which will not, be the focus of its study of ‘Investment and Corporate Banking’.
Although there was the possibility of ‘best execution’ being included in this Investment and Corporate Banking study (see Regulatory Roundup 57) a combination of last year’s thematic review on best execution (see Regulatory Roundup 58) and MiFID 2 has led the FCA to the view that it will be best to wait for the latter’s changes to be finalised before considering whether there is a need to examine the subject further.
Whilst the FCA is not formally consulting on the ToR it is inviting comments on the issues raised in the document by 22 June 2015. Interim findings are expected to be published around the turn of the year with the final report scheduled for spring 2016.
