On 17 April 2019, the FCA set out its Research Agenda.
The FCA’s research interests fall across five broad and complementary themes:
- household finance and consumer behaviour. The FCA states that to protect consumers, it needs a comprehensive understanding of individuals’ and households’ financial circumstances and decisions, as well as how firms respond to them. The FCA uses a life-cycle model as an overarching framework for considering the issues consumers face in making financial decisions throughout life;
- securities markets. The FCA’s research interests cover three main areas: microstructure, integrity and stability. In terms of market microstructure the FCA particularly wants to understand how well the current rules work across markets. For instance, do dark pools and high frequency traders improve overall liquidity?;
- competition, innovation, and firm behaviour and culture. The FCA has a statutory objective to promote effective competition and needs to understand the drivers and dynamics of innovation, and firm conduct more generally. The FCA is interested in four topics where further research – empirical and theoretical – would be particularly useful: (i) pricing practices; (ii) channels for and effects of coordination; (iii) competition in ‘experience goods’; and (iv) culture, diversity and governance;
- technology, big data and artificial intelligence. The FCA states that it needs to understand how fintech developments are shifting market economics, the resulting benefits and harms and implications for regulation. The following five topics are of particular interest to the FCA:: (i) the economics and ethics of firms’ use of big data and artificial intelligence; (ii) distributed ledger technology; (iii) machine learning for policy analysis and regulation; (iv) tech-enabled regulatory operations; and (v) quantum computing; and
- regulatory efficiency and effectiveness. From an internal perspective, the FCA’s goal is to ensure that its regulatory interventions achieve their objectives while making efficient use resources. From an external perspective, the FCA wants to achieve a regulatory regime that promotes and supports effective financial markets while minimising their costs to society.
