On 10 July 2014, the FCA published a discussion paper on how firms use dealing commission, the charges paid by consumers for executing trades and conducting external research. The FCA recently conducted a review of the use of dealing commission relating to the controls and oversight of an investment manager when acquiring research from brokers in return for client dealing commissions, resulting in changes to its rules which came into effect on 2 June 2014. The FCA considers that further work on the use of dealing commissions is needed to improve price transparency in the market for research as well as improve the controls investment managers have over the use of dealing commissions and the potential conflicts of interest for investment managers acting as agents for their customers. The FCA is proposing that unbundling research from dealing commissions is required to address these issues and that, to be most effective, it should be on an EU-wide basis. The FCA notes that the ESMA consultation paper on their advice under the Markets in Financial Instruments Directive II (known as “MiFID II”) indicates  that the same unbundling approach is advocated by the European authority.

The FCA discussion paper is available at: