On 9 March 2023, HM Treasury published a Policy Paper: Terms of reference – Investment Research Review. The independent review, which was first announced as part of the government’s Edinburgh Reforms, will look at financial services investment research and its contribution to UK capital markets competitiveness.

Through the review, the UK is seeking to identify and address concerns about the quality and quantity of investment research produced in the UK, as compared to other jurisdictions, in order to ensure London maintains its unique attractiveness as a destination for listings.

The Investment Research Review will consider the provision of investment research and its contribution to the competitiveness of the UK’s capital markets, and will focus on the following two key objectives:

  1. To assess the link between levels of research and the attractiveness of the UK as a destination to list, the Investment Research Review is asked to:
  2. Provide evidence on how investment research provision in the UK compares or is perceived to compare with other international financial services centres, in both public and private markets.
  3. Consider the amount, quality and type of investment research currently provided on firms listed or quoted, or seeking to be listed or quoted, on UK public markets, and whether that has an effect on the attractiveness of UK markets for issuers. As part of this, the review will consider if there are specific issues for research into the tech and life sciences sectors.
  4. To evaluate options to improve the UK market for investment research and provide recommendations to this effect. In particular:
  5. The Investment Research Review may recommend both legislative and non-legislative measures, including measures that may fall to the FCA to consider.
  6. As part of this, the Investment Research Review will consider the impact of the MiFID II unbundling rules on the levels and quality of investment research and evaluate the likely impact of any proposed changes on investment and fees.
  7. Actions that industry should take.

This is not an exhaustive list, and the Investment Research Review may consider other matters that it considers to be relevant to its objectives.

The review will formally start work on 13 March 2023 and has been asked to report within 3 months. It will run until June 2023.