Investment Dealers Association of Canada Enacts Proposed Policy on Analyst Standards
|Area||Corporate Finance and Securities|
Based on the recommendations of the Securities Industry Committee on Analyst Standards established in 1999 by the Investment Dealers Association of Canada (the “IDA”), the Toronto Stock Exchange and others, the IDA has recently enacted proposed Policy No. 11 - Analyst Standards (“Policy No. 11”). Policy No. 11 is currently being considered by the Ontario Securities Commission (the “OSC”) and is to become effective on a date to be determined by staff of the IDA.
The purpose of Policy No. 11 is to maintain the integrity of the capital markets and improve investor confidence through uniform minimum disclosure and supervisory requirements designed to reduce the potential for, and increase investor awareness of, the conflicts of interest that may compromise the independence of research. Policy No. 11 generally favours mandatory disclosure over outright prohibitions.
By letter dated August 15, 2002, the OSC has asked ten major investment dealers to advise the OSC on how they manage analysts’ conflicts. The OSC is assessing current practices in order to determine whether additional action is necessary to address the conflicts beyond the measures proposed in Policy No. 11.
Policy No. 11 may be broadly divided into “standards”, which require compliance, and “guidelines”, which provide best practices that are to be complied with by IDA members (“Members”) where practicable when establishing policies and procedures. Set out below is a summary of certain of the standards and guidelines contained in Policy No. 11.