FCA has published an interim report on its investment and corporate banking market study. FCA’s preliminary findings are that while many clients feel well served by primary capital market services there were also some areas where improvements could be made to encourage competition. FCA has put forward possible remedies in relation to universal banking and cross-subsidies, the Initial Public Offering (IPO) process, allocations and league tables, including:
- measures to separate lending or corporate broking activities from transactional services;
- measures to govern the manner in which banks make lending decisions;
- following up with supervisory work where an absence of allocation policies has been found;
- reducing the incentive for banks to reward favoured investor clients;
- considering the requirements of the MiFID 2 regimes, in particular the requirement for banks to maintain an allocation policy setting out the process for developing allocation recommendations;
- improving the way in which league tables are presented to clients in pitches.
FCA has also issued an occasional consultation paper on what factors influence IPO allocations to investors, and a discussion paper on suggested improvements to the way in which information is provided to investors during the equity IPO process. (Source: FCA interim report on investment and corporate banking market study and FCA discussion paper on IPO process)