INMA S4.1 Investment research recommendations — additional requirements

(1) An INMA firm must take reasonable care to ensure that a research recommendation produced by it:
(a) indicates all substantially material sources (including, if appropriate, the issuer and whether the research recommendation has been disclosed to the issuer and amended after this disclosure;
(b) adequately summarises any basis of valuation or methodology used:
(i) to evaluate a security, a derivative or an issuer; or
(ii) to set a price target for a security or derivative;
(c) adequately explains the meaning of:
(i) any recommendation made (for example, 'buy' 'sell' or 'hold') and the time horizon applying to the recommendation; and
(ii) any risk warnings, including any sensitivity analysis of the relevant assumptions; and
(d) refers to:
(i) the planned frequency (if any) of updates of the research recommendation; and
(ii) any major changes in the scope of the research as previously announced; and
(e) states clearly and prominently:
(i) the date the research recommendation was first released for distribution; and
(ii) the date and time of any security or derivative price mentioned.
(2) If the substance of the research recommendation (the later recommendation) differs from the substance of an earlier research recommendation that was about the same security, derivative or issuer and was issued during the 12-month period before the day of dissemination of the later recommendation, the later recommendation must clearly and prominently indicate the difference and state the date of the earlier research recommendation.
(3) If complying with the requirements of subrule (1) (a), (b) or (c) would be disproportionate to the length of the research recommendation and there has been no change in the methodology or basis of valuation used, the INMA firm may, instead of complying with the requirements, clearly and prominently refer in the research recommendation to where the required information can be directly and easily accessed (for example, by a hyperlink to the information on an appropriate web page of the firm).
(4) Subrule (1) (a) does not apply in relation to a non-written research recommendation to the extent that complying with it would be disproportionate to the length of the research recommendation.
Inserted by QFCRA RM/2019-4 (as from 1st January 2020).