In March this year, the new framework for investment banking was unveiled, paving the way for the further rationalisation of domestic capital market intermediaries. As you may recall, the objectives of the framework are twofold: to facilitate internal rationalisation of the merchant bank, stockbroking company and discount house within the same financial group; and to promote the rationalisation of the discount house and universal broker industries. This integration is expected to promote a more competitive and dynamic financial system, enhance efficiency and strengthen the potential to capitalise on expanded business opportunities, both locally and abroad, thereby strengthening the competitive position of the new entity. Foreign equity participation in investment banks has also been liberalised, from 30% to 49%, as part of the overall efforts to strengthen their linkages globally and to enhance the transfer of specialised skills and expertise in the investment banking industry. Moving forward, the competitive pressures are expected to intensify in the investment banking industry. With the extension of the investment bank framework to universal brokers, 17 investment banks may emerge from the rationalisation exercise. Amid this more competitive and challenging environment, the ability of the investment banks to thrive will no longer depend on factors such as asset and capitalization levels, but on their capacity and capability to manage and utilise their resources in the most efficient and effective manner.

According to the TCFD, disclosures should be: consistent (complete, and comparable across time and issuers); ‘decision useful’ (relevant to investment decisions, specific, reliable, verifiable); and forward looking (showing not just where you have been, but where you are going, and how).19  14  The Greenhouse Gas Protocol Corporate Standard classifies a company’s emissions into: Scope 1 (direct emissions from owned or controlled sources); Scope 2 (indirect emissions from generation of purchased energy); and Scope 3 (all other indirect emissions in the upstream and downstream value chain of the reporting company). 15 https://www.inrate.com/cm_data/ESG_Rating_Disagreement_and_Stock_Returns.pdf 16 According to https://citigatedewerogerson.com/wp-content/uploads/2020/10/IR-SURVEY-2020.pdf, 79% of firms report a rise in ESG investor queries in 2020; and https://shareaction.org/fossil-fuels/resolutions-tracker/ suggests a pickup in shareholder resolutions on climate change. 17 https://www.fca.org.uk/news/press-releases/fca-announces-proposals-improve-climate-related-disclosures-listed-companies 18 https://www.bankofengland.co.uk/-/media/boe/files/speech/2020/leading-the-change-climate-action-in-the-financial-sector-speech-bysarah-breeden.pdf?la=en&hash=A76529EC3930769B0D6FA8FECBFF0507BE6DBBA3 19 https://www.tcfdhub.org/recommendations/ 7  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  7  Consistency – the first of those criteria – has been a challenge. The TCFD is widely recognised as the right overarching framework: nearly half of large companies globally were already disclosing TCFD-aligned metrics at the time of the last comprehensive survey in 2019 (Chart 3), and support for the TCFD had grown to over 1,440 organisations by September this year, with a market capitalisation of over $ trillion.