Industry welcomes Mansion House short selling and investment research reforms
On Monday (10 July), Chancellor Jeremy Hunt introduced a “sweeping package of UK regulatory reforms” following his Mansion House speech.
Following Hunt's Mansion House speech on Monday (10 July), some of the reforms introduced by the Treasury included a change in short-selling rules and how to deal with the clash between UK and US rules on payment for research.
The government and regulators' drive to find ways to re-energise London as a market for the convening of global equity capital has been welcomed by the industry, particularly the adoption of all the recommendations in Rachel Kent's UK Investment Research Review.
The move to permit bundled payment for research and execution services in line with the conclusions of the Investment Research Review means the UK is moving its framework to be compatible with the structure of the US regime.
Trio of reforms including review of short-selling rules welcomed by industry
An Investment Association spokesperson told Investment Week that a «well-functioning» research market is essential in helping investment managers channel capital into companies which will provide long-term returns for their clients.
However, the association noted the decline in research coverage pre-dates MiFID II, and the rebundling of payments is therefore not necessarily a «silver bullet» to increase coverage.
«Any potential regulatory changes should also consider the implications of regulatory divergence between the UK, US and EU and the impact this may have on investors and their clients,» the IA said.
Andrew Poole, director at ACA Group, noted that by essentially allowing «rebundling» the hope is that well funded research will reach the hands of investors and encourage them to invest in new
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