Finansinspektionen Amends Securities Transaction Rules on Investment Research Payments Under FFFS 20

Key Takeaways

• Finansinspektionen has amended Chapter 7 of FFFS 2017:2 to revise the conditions under which securities institutions may receive third-party investment research without it being treated as an inducement.
• The amendments take effect October 1, 2026, and tighten requirements for research quality assessment, client disclosure, and research budget governance.
• Compliance teams at Swedish securities institutions must update their research payment arrangements and controls before that date.

Deep Dive

Finansinspektionen has amended Chapter 7 of FFFS 2017:2 to revise the conditions under which securities institutions may receive third-party investment research without it being treated as an inducement. The amendments take effect October 1, 2026, and tighten requirements for research quality assessment, client disclosure, and research budget governance. Compliance teams at Swedish securities institutions must update their research payment arrangements and controls before that date.

Two compliance pathways exist. Under Section 9, an institution may receive research if the provider does not take part in execution services, is not part of a group offering execution or brokerage services, and the institution assesses the research's quality, usability, value, and contribution to investment decisions every year. Under Section 10, institutions that do not meet those conditions, such as those buying from providers that also execute trades, must meet more extensive requirements. These include:
- a written agreement setting out the compensation method, including how total research cost is factored into execution terms;
- objective quality criteria and annual assessments against them;
- corrective measures where research proves poor quality or not useful;
- client disclosure on whether payment is joint or separate and what information is provided;
- client access to the institution's payment guidelines.

Payment model obligations differ. Institutions using joint payment must document the total costs attributable to third-party research and provide them to clients annually on request (Section 11). They must also inform clients how conflicts of interest are prevented or managed under Chapter 9, Section 9 of the Securities Market Act (Section 12). Institutions paying separately may use their own funds or client funds, and if client funds are used they must follow Sections 14–23 (Section 13).

Section 18 adds governance requirements. The research budget must rest on a reasonable assessment of the institution's research needs. The board must ensure funds are distributed appropriately and in a controlled manner, for the clients' benefit. Controls must cover the entire verification chain for supplier payments and how amounts are set against the Section 10(2) quality criteria. Budget and analysis account funds may not be used for internal analysis work.

Recommended actions: complete a gap analysis of current research procurement and payment arrangements before October 1, 2026, and classify each provider under Section 9 or Section 10. Update provider agreements, define objective quality criteria, schedule annual assessments, and document corrective actions. Revise client disclosures and payment guidelines, and confirm conflict-of-interest procedures. Brief the board on its Section 18 oversight duties, test controls over the payment chain, and confirm no budget funds support internal research. Compressed implementation time (publication on September 21 versus an October 1 effective date) raises execution risk, so prioritize quickly. Regulatory exposure includes supervisory findings on inducement breaches, weak governance evidence, and client disclosure failures.

Source: Finansinspektionen