A poor catch

13 April 2016 By Dominic Elliott

Britain’s financial watchdog took a year to find minor problems with competition in investment banking. Concern over the allocation of shares to favoured investors in IPOs is valid. Other issues – like whether banks manipulate league table data – look a lot like coddling clients.

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Investment banks should do more to encourage competition and fairer treatment of customers and potentially change the way the process for initial public offerings work, Britain’s financial watchdog said on April 13 as it published an interim market study.

The FCA highlighted four areas that could be problematic: cross-selling and specifically the use of contractual clauses by lenders to guarantee their participation in future transactions; the favouring of certain investors when allocating shares for IPOs; restrictions on research during the IPO process; and the abuse of league tables for marketing purposes.

The FCA is asking for views on the interim report and potential remedies by May 25 2016. It is asking for views on a separate IPO discussion paper and potential changes to the IPO process by July 13 2016.

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