FSA clarifies research standards issues
The UK Financial Services Authority (FSA) has issued new and wide-ranging guidelines for investment banks related to their publication of research in new issues of securities.
The goal of the FSA’s new proposals is to provide a clearer regulatory line on standards of conduct within the current framework of rules. This is achieved by instituting specific guidelines about the systems and controls that banks need to have in place to ensure they do not improperly influence the content of research reports. These include removing analysts altogether from the client-pitching and marketing processes and avoiding reward structures that encourage judgement to be compromised.
Other measures include the advent of a historical price chart showing price movements against recommendations, the introduction of a quiet period for new securities issues, and any share allocation to be controlled by senior finance personnel who are independent of the process of servicing investment clients.
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