New transparency rules for bonds and derivatives markets will give investors more information and reduce costs for firms. And under new proposals, asset managers for pooled investment funds will be given greater flexibility in how they pay for investment research, making it easier to buy insight and analysis across borders.
This is part of the FCA’s ongoing work strengthening wholesale markets, while ensuring investors have access to the right information to make decisions.
Jon Relleen, Director of Supervision, Policy and Competition at the FCA, said: “We want UK markets to be efficient and to support economic growth. Putting more information in the hands of investors and giving investment firms greater access to research to inform their strategies will bolster UK markets. We want to seize opportunities to enhance and streamline our rules and support the competitiveness of sectors in which the UK is already a recognised world leader.”
Bond and derivatives trade information
The UK is the world leader in bond and derivatives markets. The FCA aims to cement that position by ensuring investors have access to better, quicker and clearer data at a fair price, which helps these markets work efficiently:
• Greater transparency, in terms of timeliness and content of the information published to the market.
• Lower compliance costs for trading venues and investment firms by simplifying the regime.
• Higher quality post-trade data, which will support the creation of a consolidated tape for bonds in the UK.
New payment options for investment research
In July 2024, the FCA finalised rules allowing institutional investors more flexibility in paying for investment research. Following feedback from industry, the FCA proposes to extend those freedoms to pooled investment funds and allow fund managers to combine payments for research with trade execution, subject to certain guardrails.
• The new bond and derivatives transparency rules will not come into force until 1 December 2025.
• The FCA is also establishing a bond consolidated tape, to ensure that data is not only of higher quality and available on a more timely basis, but it is also accessible in a cost-effective way.
• The FCA recently set out rules giving institutional investors greater flexibility in how they pay for research. The FCA is now proposing to extend this flexibility to asset managers of alternative investment funds and undertakings for collective investment in transferable securities (UCITS).
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