Investment Research

AFME has led sell-side engagement on investment research proposals in the UK, initiated by the UK Treasury’s Investment Research Review.

This included recommendations from Rachel Kent, who led the review, which called for ‘action to protect and develop the UK as a centre of excellence for investment research’. Acting on the recommendation for additional optionality for research payments ‘as soon as practical’, the FCA consulted on relevant rules for segregated mandates in April 2024.

AFME worked closely with both sell-side and buy-side trade associations to advance our members’ positions that the new payment option should be flexible and less onerous than existing payment structures, and that the UK regime should not be more restrictive or inflexible than other jurisdictions. The FCA Policy Statement on “Payment Optionality for Investment Research”, introducing a new “CSA-like” payment option, was published in July 2024, with rules entering into force on 1st August 2024. The FCA followed up with a separate consultation which extended payment optionality to pooled vehicles, with final rules entered into force in May 2025.

In the UK, we are also advocating for increased payment optionality for corporate access services and VAT relief on payment for both investment research and corporate access.

With similar objectives in mind, in 2022 the European Commission launched the EU Listing Act Package, linked to the Capital Market Union goal to improve access to market-based sources of finance for small and large firms. During the negotiations, proposals for a new research payment option were eventually agreed in the final MiFID text, which was published in the Official Journal of the European Union in November 2024. We have welcomed the flexibility offered by the new EU rules on research payments. Member States will have until June 2026 to transpose the MiFID changes under the EU Listing Act package into domestic rules. Stemming from Level 1 mandates: in November 2024, ESMA consulted on its draft technical advice to the EC, which incorporates the new payment option into existing Level 2 measures (relevant Final Report was published in April 2025). In December 2024, ESMA also launched its consultation on the EU Code of Conduct for issuer sponsored research, to which we responded in March 2025.

At this stage firms are weighing the costs and benefits brought about by the new frameworks in the UK and EU and take up remains to be seen.