SECP issues research analyst regulations
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ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has issued ‘Research Analyst Regulations, 2015’, under the newly promulgated Securities Act.
They are aimed at regulating the area of investment recommendation and research analysis, addressing potential conflict of interest and ensuring impartiality of the reports and recommendations made by research analysts.
The regulations have been framed after consulting stakeholders and the public, the SECP said in a press release issued on Tuesday.
In line with the principles set out by the International Organisation of Securities Commissions (IOSCO), these regulations are expected to address the conflict of interest issues faced by research analysts, improve governance standards and minimise market malpractices, with special emphasis on the sell-side research analysts.
The regulations require establishing comprehensive policies and procedures by research analysts and research entities, so as to effectively address issues.
In order to avoid potential conflict of interest, adequate provisions have been provided in relation to compensation of research analysts and conduct of business.
For standardisation and quality assurance purposes, broad guidance is provided in respect of contents of research reports. Similarly, appropriate disclosure requirements have been prescribed enabling users of research reports to make unbiased and informed decisions.
The regulations also provide for minimum qualifications and experience requirements for research analysts, their general responsibilities and required records to be maintained besides providing provisions for compliance and enforcement mechanism and liability for action in case of default.
With these regulations in place, the area of research and recommendations in securities market is going to be properly regulated. They provide an enabling environment for further growth of this area and will help to streamline relevant market practices.
Published in Dawn, July 29th, 2015
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