The Financial Conduct Authority will investigate competition within the investment and corporate banking sector.
The watchdog stated that the bundling and cross selling of services makes it difficult for new market entrants to compete.
The FCA said: "Within this market study, we will focus on the impact of transparency and bundling on competition for investment banking and corporate banking services.
"This is an appropriate market study because the benefit from improvements in the way competition works could be high."
The investigation will look in detail at the pricing of asset management services, data services, clearing and execution, and the impact of a reduction in the number of clearing services.
Christopher Woolard, director of strategy and competition, said: "The UK is a global hub for investment banking, and this sector plays a crucial role in our economy, helping companies raise capital for investment, expansion and funding ongoing operations.
"What was clear from the discussions we had with stakeholders and firms was that there are unanswered questions about potential conflicts of interest and value for money in this market. This will form part of our wider work in the wholesale markets, alongside the Fair and Effective Markets Review."
The regulator's Fair and Effective Markets Review into conduct in commodity, currency and bond markets was launched in response to widespread evidence of banks rigging interest rates and currency market benchmarks.
The results of the investigation will be published later in the spring, around the time that the FCA assumes the power to enforce breaches of competition legislation and refer markets to the Competition and Markets Authority.