MFA Submits Comments to UK FCA Responding to Consultation on Use of Dealing Commissions

MFA submitted comments to the UK Financial Conduct Authority (FCA) in response to its consultation on the use of dealing commission rules. In the letter, MFA recommended that the FCA provide an exception to its dealing commission rules that allow hedge fund managers (or any other investment managers) who advise funds with sophisticated investors to rely on their contractually negotiated terms in determining the allocation of expenses, including the allocation of execution, research and other expenses.

In addition, MFA encouraged the FCA to: (i) retain the “reasonable grounds” standard under the current dealing commission rules, or, at a minimum, provide further guidance on the criteria for permitted research and execution services, (ii) reconsider the scope of the proposed definition of corporate access service, and (iii) require sell-side firms to provide much-needed information about the nature of research or services provided to investment managers.