UK Chancellor of the Exchequer Jeremy Hunt is set to announce an end to the MiFID II ban on free research for clients on Monday (10 July), according to reports.
The move is part of a review into investment research carried out by lawyer Rachel Kent, two people familiar with the matter told Bloomberg.
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The European regulation forced financial firms to separate the cost of investment research from trading expenses, in a bid to increase transparency and reduce conflicts of interests.
But the rules were criticised that it led to a reduction in the amount of research available, with European fund managers being forced to cut their research budgets in 2018 by a fifth, as they had to reduce the number of providers they used.
According to the UK government, the Investment Research Review was commissioned because "investment research can provide investors with information that can allow them to better understand a company's business model, performance, and risks, and therefore to assess its value as an investment".
"It is used by potential investors who are looking to trade in both public and private markets to inform investment decisions. Low levels of investment research can therefore make it harder to value companies, make it more difficult for companies to attract investors, and make UK markets less attractive to businesses that want to raise capital."
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According to the people familiar with the matter, Hunt is likely to embrace the proposals made in the review including the creation of a new investment platform where investors can access information on companies alongside a pre-public offering arena, where firms can raise funds without a full initial public offering.
Lifting the ban on client research would be part of the UK's push to separate itself from some of the legacy EU rules and legislation after Brexit.
