ANALYSTS have been given guidance on how to manage conflicts of interest.
From January 1 the Corporations Act will impose specific obligations on Australian financial services licensees to have adequate arrangements to manage conflicts of interests.
The Australian Securities and Investments Commission guidance to analysts on this matter suggests they consider, among other things:
• Separating staff providing research both physically and structurally from staff performing investment banking, corporate advisory or dealing functions;
• Not providing research on a product issuer while non-research services are also being provided to the issuer;
• Making research staff remuneration non contingent on the introduction or retention of clients in non-research areas; and
• Ensuring research staff do not unfairly trade ahead of the distribution of a research report.
ASIC deputy executive director of financial services regulation Pamela McAlister said: “Research report providers play a fundamental role in getting timely and accurate information to the market”.
“Domestic and overseas experience has confirmed the importance of report providers managing conflicts of interest to promote integrity in research.”