In this report, FedFin assesses the paper released on February 19 by the U.K.’s Financial Conduct Authority (FCA) laying out the premises of a competition review of wholesale finance in that nation’s global financial hub.  The analysis is important not only for all financial-services firms engaging in investment banking and corporate finance, but also for those engaging in asset management – next up on the U.K.’s break-up review list.  The FCA’s authority to reprice or even demand cessation of activities is unprecedented among global regulators, but its decisions will nonetheless influence those in the U.S. where both politicians and regulators are focused on complex banking organizations and intra-group risk.  This is most clear in FSOC’s request for views on asset management (see FSM Report SYSTEMIC75), but it is also a theme in FRB and FDIC review of the living wills proposed by the largest banking organizations doing business in the U.S.  Renewed FRB scrutiny of anti-tying rules may also be sparked by the U.K. inquiry (see Client Reports in the TYING series).  Investor demands for big-bank restructuring will also intensify if regulatory conclusions lend credence to them.       

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