INMA S4.3 Investment research for recommendations — additional requirements for disclosure of interests
(1) This rule applies to a research recommendation produced by an INMA firm in relation to a relevant investment.
(2) The INMA firm must clearly and prominently disclose in the research recommendation the following information on its interests and conflicts of interest:
(a) major shareholdings that exist between it or any related person and the issuer (the relevant issuer) including:
(i) shareholdings exceeding 5% of the total issued share capital in the relevant issuer that are held by the firm or any related person; or
(ii) shareholdings exceeding 5% of the total issued share capital of the firm or any related person that are held by the relevant issuer;
(b) any other financial interests held by the firm or any related person in relation to the relevant issuer that are significant in relation to the research recommendation;
(c) if applicable, a statement that the firm or any related person is a market maker or liquidity provider in the securities of the relevant issuer or in any related derivatives;
(d) if applicable, a statement that the firm or any related person has been lead manager or co-lead manager, over the previous 12 months, of any publicly disclosed offer of securities of the relevant issuer or in any related derivatives;
(e) if applicable, a statement that the firm or any related person is party to any other agreement with the relevant issuer for the provision of investment banking services;
(f) if applicable, a statement that the firm or any related person is party to an agreement with the relevant issuer relating to the production of the research recommendation.
(3) Subrule (2) (e) does not apply in relation to an agreement if:
(a) disclosure of the statement would involve the disclosure of confidential information; and
(b) the agreement has been in force for at least 12 months or has given rise during that period to a payment or to the promise of payment.
(4) The INMA firm must disclose, in general terms, in the research recommendation the organisational and administrative arrangements set up within the firm to effectively prevent or deal with conflicts of interest in relation to research recommendations, including information barriers.
(5) If a person working for the INMA firm who is involved in the preparation of the research recommendation receives or buys shares of the relevant issuer before a public offering of the shares, the price at which the shares were acquired and the date of acquisition must be disclosed in the research recommendation.
(6) The INMA firm must publish the following information on a quarterly basis, and must disclose in its research recommendations:
(a) the proportion of all research recommendations published during the quarter that are 'buy', 'hold', 'sell' or equivalent terms;
(b) the proportion of relevant investments in each of those categories issued by issuers to which the firm provided material investment banking services during the last 12 months.
(7) If the disclosures required by subrules (2) to (6) would be disproportionate to the length of the research recommendation, the INMA firm may, instead of complying with the subrules, clearly and prominently refer in the research recommendation to where the required disclosures can be directly and easily accessed (for example, by a hyperlink to the disclosures on an appropriate web page of the firm).
(8) Subrules (2) to (6) do not apply in relation to a non-written research recommendation to the extent that complying with them would be disproportionate to the length of the research recommendation.
|Inserted by QFCRA RM/2019-4 (as from 1st January 2020).|