Requirement (MIFID)
Article 25 Additional organisational requirements where a firm produces and disseminates investment research
Requirements MIFID - DIRECTIVE 2006/73/EC
Description
Description
1. Member States shall require investment firms which
produce, or arrange for the production of, investment research
that is intended or likely to be subsequently disseminated to
clients of the firm or to the public, under their own
responsibility or that of a member of their group, to ensure
the implementation of all the measures set out in Article 22(3) in
relation to the financial analysts involved in the production of
the investment research and other relevant persons whose
responsibilities or business interests may conflict with the
interests of the persons to whom the investment research is
disseminated.
2. Member States shall require investment firms covered by
paragraph 1 to have in place arrangements designed to ensure
that the following conditions are satisfied:
(a) financial analysts and other relevant persons must not
undertake personal transactions or trade, other than as
market makers acting in good faith and in the ordinary
course of market making or in the execution of an
unsolicited client order, on behalf of any other person,
including the investment firm, in financial instruments to
which investment research relates, or in any related
financial instruments, with knowledge of the likely timing
or content of that investment research which is not publicly
available or available to clients and cannot readily be
inferred from information that is so available, until the
recipients of the investment research have had a reasonable
opportunity to act on it;
(b) in circumstances not covered by point (a), financial analysts
and any other relevant persons involved in the production
of investment research must not undertake personal
transactions in financial instruments to which the investment
research relates, or in any related financial instruments,
contrary to current recommendations, except in
exceptional circumstances and with the prior approval of a
member of the firm's legal or compliance function;
(c) the investment firms themselves, financial analysts, and
other relevant persons involved in the production of the
investment research must not accept inducements from
those with a material interest in the subject-matter of the
investment research;
(d) the investment firms themselves, financial analysts, and
other relevant persons involved in the production of the
investment research must not promise issuers favourable
research coverage;
(e) issuers, relevant persons other than financial analysts, and
any other persons must not before the dissemination of
investment research be permitted to review a draft of the
investment research for the purpose of verifying the
accuracy of factual statements made in that research, or
for any other purpose other than verifiying compliance
with the firm's legal obligations, if the draft includes a
recommendation or a target price.
For the purposes of this paragraph, ‘related financial instrument’
means a financial instrument the price of which is closely
affected by price movements in another financial instrument
which is the subject of investment research, and includes a
derivative on that other financial instrument.
3. Member States shall exempt investment firms which
disseminate investment research produced by another person
to the public or to clients from complying with paragraph 1 if
the following criteria are met:
(a) the person that produces the investment research is not a
member of the group to which the investment firm
belongs;
(b) the investment firm does not substantially alter the
recommendations within the investment research;
(c) the investment firm does not present the investment
research as having been...
Comment
Applies to Article 13(3) of Directive 2004/39/EC