Market update (AM): Hargreaves tumbles on regulatory concerns

Bristol-based financial services company Hargreaves Lansdown (HL.L) saw share price slump this morning (at 1010) after being forced to issue a statement over regulatory changes.

Financial market analysis and opinion for the UK investment industry

Financial market analysis and opinion for the UK investment industry


Bristol-based financial services company Hargreaves Lansdown (HL.L) saw share price slump this morning (at 1010) after being forced to issue a statement over regulatory changes.

Hargreaves saw its share price by 10.9 per cent to 517p, after investors reacted to a Financial Services Authority (FSA) announcement issued yesterday that mooted the possibility of banning payments by fund providers to platforms.

Sheila Nicoll, director of conduct policy at the FSA, said banning payments would ‘likely’ be in the best interests of consumers.

She added, ‘But we need to analyse the  impact on consumers and on firms’ business models before we propose any new  rules.’

The regulator is set to review the practice, which is a key contributor to revenues, after the introduction of the Retail Distribution Review at the end of 2012.

The FSA announced that fund platforms, such as Hargreaves Lansdown’s Vantage service, would have to disclose more information regarding payments by fund providers.

In a statement, the company revealed all changes announced by the regulator would require little work to implement and would not materially impact its business.

Pharmaceutical company Shire (SHP.L) saw its share price slip by a more ‘modest’ 3.4 per cent to 2,027p, while engineer IMI (IMI.L) dropped 2.9 per cent to 1,012p.

Kazakhmys (KAZ.L) dropped 2.7 per cent to 1,277p, as Xstrata’s (XTA.L) half-yearly report failed to excite, leading share price 2.5 per cent lower to1,248.5p.

Barclays (BARC.L) was the strongest riser after publishing its own first half results. Despite pre-tax profits taking a £1 billion hit from payment protection insurance (PPI) redress, investors were more bullish about the bank’s prospects, with share price rising 2.9 per cent to 223.35p (at 1011).

Peers HSBC (HSBA.L) and Standard Chartered (STAN.L) also rose in morning trading, with share price up 1.7 per cent to 618p and 1.6 per cent to 1,575p, respectively.

Defensive utilities companies National Grid (NG.L) and Severn Trent (SVT.L) completed the top five risers, with share price rising 1.6 per cent to 600p and 1.3 per cent to 1,435p, respectively.
 
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