Page 42 - SC SCAR 2023 ENGLISH Flipbook
P. 42

                                PART 2 REGULATORY PERFORMANCE AND OUTCOMES
  Thematic Review on the State of Compliance of Capital Market Intermediaries with the Guidelines on Market Conduct and Business Practices for Investment Analysts and their Analysts
Intermediaries licensed for investment advice play an integral role in the capital market industry as they keep investors informed on valuable investment opportunities and challenges, via their research services conducted.
Considering their crucial role within the sector, the SC had issued Guidelines on Market Conduct and Business Practices for Investment Analysts and their Analysts (IA Guidelines) in December 2022 that detailed core principles and minimum standards to be observed by Investment Analysts (IA). Following up on the issuance of guidelines, an assessment was carried out to ascertain the current state of compliance of all CMSL IA holders with the requirements of the IA Guidelines.
The assessment which was carried out before the effective date of the IA Guidelines on 8 June 2023, revealed that the majority of CMSL IA holders have been working towards complying with the requirements of the IA Guidelines. However, compliance levels within the industry should be elevated further:
  Management and Disclosure of Conflict of Interest
The management of actual and potential situations of conflict of interests (COI), which includes controls on:
• limitation of input on pre-publication reviews by non-research functions;
• events where conflict is unavoidable;
• chinese wall arrangements;
• renumeration structure; and
• periodic and ad hoc declarations of personal dealings and trading activities.
Research Quality and Content
Ensuring that provision of quality information in research-related services, via controls which include:
• reasonable bases for any recommendations, opinions, etc.;
• supervision over research quality and content; and
• rectification and notification of post- publications errors.
Quality and Content
 Conflict of Interest
Confidentiality of Unpublished and Proposed Research Reports
Regulating the flow of information relating to unpublished and proposed research reports and recommendations, which include controls on:
• information and physical barriers;
• management of material non-public information;
• clear review and approval process; and
• fair dissemination of reports.
These intermediaries’ level of compliance will continue to be monitored via ongoing oversight.

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