FCA sets out terms for probe into corporate and investment banking
The UK’s Financial Conduct Authority’s study into competition in investment and corporate banking will focus on choice, transparency, bundling and cross-subsidisation in debt and equity capital markets, M&A and acquisition financing. It will also consider links between competition in these areas and related activities such as corporate lending and broking, and ancillary services.
Christopher Woolard, FCA director of strategy and competition said: “We want to see a sector that benefits the real economy by helping businesses of all sizes access capital. That means offering real choice, transparency and good service at every level. It is also essential that the regulatory framework encourages competition, and we will engage with banks, advisers, clients and investors throughout the review to assess which aspects of the market work well, and identify areas for improvement.”
The FCA says the study will take into account ongoing domestic and international work, including the Fair and Effective Markets Review – led by the Bank of England and co-chaired by the FCA and HM Treasury, this was established by Chancellor of the Exchequer George Osborne in June 2014 to conduct a comprehensive and forward-looking assessment of the way wholesale financial markets operate – and the implementation of new EU legislation, particularly the new Markets in Financial Instruments Directive and the Capital Markets Union.
This is the first FCA market study into competition in wholesale markets, and is part of its objectives to ensure markets work well and promote competition in the interest of consumers. A final report is due in spring 2016, and the FCA expects to publish a report setting out the interim findings and any proposed “remedies” before then.
The deadline for submissions to the review is 22 June 2015. The FCA says that it is seeking input from a wide range of firms from full service banks to boutiques and public sector and corporate clients of all sizes and “particularly encourages smaller firms who have recently raised capital and new entrants to these markets” to share their views.