Analyst conflict of interest not rife in Australia, ASIC finds
(Australia) Investment banks could improve management of their independence procedures but, unlike the US, Australian analysts are not guilty of "systematic" conflicts of interest.
That’s the conclusion reached by the Australian Securities and Investment Commission (ASIC) following an examination of research practices of Australia’s investment banks.
But despite spending nine months on the project, ASIC said it "cannot say that the industry is without flaw or is immune from misconduct, because [our] review was necessarily limited to a sample selection of entities and a limited period of time".
"The review indicates that Australia is unlikely to have experienced the extent and seriousness of misconduct that occurred in the United States. This is also consistent with the position found to exist in the United Kingdom by the Financial Services Authority," ASIC executive director of Financial Services Regulation, Ian Johnston said.
"However, the review has identified a number of compliance issues that require further improvement, particularly relating to the independence of research analysts and the processes for managing conflicts of interest when they are identified," he said.
He said ASIC’s policy initiatives would "support the legislative reforms introduced through the Federal Government's CLERP 9 Bill, and the statement of principles currently being prepared by the International Organization of Securities Commissions (IOSCO)".
ASIC’s findings will "form the basis" of a draft policy proposal paper, due after the draft legislation for CLERP 9 is released.
But despite spending nine months on the project, ASIC said it "cannot say that the industry is without flaw or is immune from misconduct, because [our] review was necessarily limited to a sample selection of entities and a limited period of time".
"The review indicates that Australia is unlikely to have experienced the extent and seriousness of misconduct that occurred in the United States. This is also consistent with the position found to exist in the United Kingdom by the Financial Services Authority," ASIC executive director of Financial Services Regulation, Ian Johnston said.
"However, the review has identified a number of compliance issues that require further improvement, particularly relating to the independence of research analysts and the processes for managing conflicts of interest when they are identified," he said.
He said ASIC’s policy initiatives would "support the legislative reforms introduced through the Federal Government's CLERP 9 Bill, and the statement of principles currently being prepared by the International Organization of Securities Commissions (IOSCO)".
ASIC’s findings will "form the basis" of a draft policy proposal paper, due after the draft legislation for CLERP 9 is released.
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