The changing role of corporate broking in the UK

From historical necessity to strategic judgement

Corporate broking has long been a distinctive feature of the UK capital markets. While its relevance is often questioned, the role has not disappeared. Instead, it has evolved in response to structural shifts in regulation, market structure and investor behaviour.

Understanding the modern role of the corporate broker requires an appreciation of both its historical origins and its current regulatory context and, critically, a reset of expectations about where value now lies.

A brief history of corporate broking

Corporate broking emerged in a very different market environment. Prior to the “Big Bang” reforms of 1986, UK financial services were highly segmented: banks could not own brokers, brokers could not own market makers, and companies’ engagement with shareholders was channelled almost entirely through their broker.

In this context, the corporate broker played a central role:

• acting as the primary interface between companies and investors,
• providing visibility over trading and shareholder activity,
• marketing the equity story to a concentrated institutional investor base, and
• supporting equity issuance and corporate actions.

Following deregulation, many expected the designated corporate broker role to be absorbed into broader investment banking teams. Instead, the UK retained the concept of a named broker, reflecting boards’ continued desire for a long-term adviser closely connected to equity markets and investor sentiment.

Over time, however, the foundations of the traditional broking model have been fundamentally reshaped.

Structural changes that reshaped the role

Several long-term trends have altered what corporate brokers can realistically deliver:

• the democratisation of information through digital disclosure and real-time data;
• MiFID II and the unbundling of sell-side research, although both the EU and the UK are now allowing more flexible bundled payment options as part of post-MiFID II reforms;
• a more global, fragmented and index-driven shareholder base; and
• electronic and programmatic trading, reducing visibility over trading flows.

As a result, brokers no longer control information, liquidity or influence valuation in the way they once did. Their value has shifted away from execution and distribution towards judgement, interpretation and strategic advice.

Regulatory context: Main Market vs AIM

Main Market

For UK Main Market companies, there is no longer a regulatory requirement to retain a corporate broker on an ongoing basis. Companies must appoint a Sponsor for certain transactions under the Listing Rules, with the Sponsor advising on regulatory compliance and liaising with the Financial Conduct Authority. This role is transaction-specific and distinct from day-to-day corporate broking.

Despite this, almost all Main Market companies continue to appoint one or more corporate brokers, and in some cases three corporate brokers. The decision has shifted from compliance to judgement: brokers are retained because boards believe they add value, not because they are required.

AIM

The position is different for companies listed on the Alternative Investment Market (AIM) in the UK.

AIM companies must always retain a corporate broker. In practice, this broker often acts in a dual capacity:

• as Nominated Adviser (Nomad), advising on AIM Rules compliance and ongoing suitability; and
• as corporate broker, providing market access, investor engagement and capital raising support.

This adviser-centric model reflects AIM’s lighter-touch regulatory framework and reliance on continuous professional oversight.

What corporate brokers do – and don’t do – today

While traditional levers such as sales and research have diminished, boards continue to value corporate brokers for several reasons:

• interpreting investor sentiment and market dynamics;
• acting as a strategic sounding board for boards and management;
• supporting capital markets readiness, including activism and takeover preparedness; and
• providing execution capability and credibility at moments of market stress.

Importantly, brokers do not control share prices, liquidity or influence valuation. Those outcomes are driven by strategy execution, credibility and sustained investor engagement, responsibilities that now sit firmly with companies themselves.

As discussed by Andrew Foster, Chair of Corporate Broking at Morgan Stanley, on Equitory’s Enquire Investor Relations Podcast, the most valuable brokers today act as a “critical friend” providing independent challenge, stress-testing strategy against investor expectations, and helping boards identify misalignment early, rather than promising outcomes beyond anyone’s control.

Key takeaways for Boards and IR teams

• Corporate broking has evolved, not declined
  Its value has shifted from execution and distribution to judgement, interpretation and strategic advice.
• Appoint brokers by choice, not habit
  For Main Market companies, corporate broking is a governance decision. Boards should be explicit about why brokers are appointed and what role they are expected to play.
• Value challenge over reassurance
  The most effective brokers act as a critical friend, offering independent and sometimes uncomfortable advice, rather than affirming management’s narrative. Andrew Foster comments: “The key thing you need to focus on is positioning your story appropriately… that becomes really important in terms of your broking line-up, that you have advisers that can give you advice, not advisers that are going to parrot what you say to them.”
• IR owns the equity story
  Companies, not brokers, are now the primary communicators of the investment case. Brokers support and challenge; they do not replace internal capability. According to Andrew Foster: “The best evangelists of the corporate story today are the IR teams.”
• Fewer advisers can mean better outcomes
  Overcrowded advisory line-ups risk diluted accountability and conflicting advice, particularly in stressed situations. IR teams should challenge the status quo that dictates they should appoint two corporate brokers. Andrew Foster says: “I would say less is more… you should only have people in your advisory line-up that you absolutely trust.”
• Capital markets readiness is continuous
  Broker value is often greatest before a transaction or crisis, not during it.
• Link investor targeting to long-term strategy
  This ensures a supportive shareholder base for future transactions and capital strategy. As Andrew Foster says: “If you have misalignment between what your strategic objectives are and how you position your equity story, you’re going to end up with the wrong shareholders.”
• Judge advice quality, not promised outcomes
  Set KPIs for brokers and also assess their performance on insight, judgement and challenge, not on share price or liquidity promises.

Conclusion

Corporate broking remains an integral part of the UK capital markets, but its purpose has changed. Once a structural necessity, it is now a strategic choice.