The Financial Conduct Authority (FCA) is to launch its first wholesale market study into investment and corporate banking to assess whether competition in the sector is working properly.
This follows the publication of its review into competition in the wholesale sector, which found that limited clarity over price and quality of services may make it difficult for clients to assess whether they are getting value for money, and that the bundling and cross selling of services could make it difficult for new entrants or smaller established firms to challenge established large players in the market.
Christopher Woolard, director of strategy and competition, says: “What was clear from the discussions we had with stakeholders and firms was that there are unanswered questions about potential conflicts of interest and value for money in this market.”
Terms of reference for the invesitgation will be published in the Spring and will seek feedback from industry, trade bodies and clients.
During the wholesale sector review the FCA met with around 70 organisations and individuals, through a combination of round-tables and one-to-one meetings and received 40 written responses.
This provided feedback on other potential competition issues that might benefit from further investigation in the future, including:
- How purchasers get value for money when buying asset management services.
- The pricing and availability of data and related services.
- Vertical integration of clearing and execution services.
- The impact of a reduction in the number of clearing members and a lack of client clearing on over-the-counter (OTC) derivative markets.