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COBS 12.3 Non-independent research

Application

COBS 12.3.1R

This section applies to a firm that produces or disseminates non-independent research.

[Note: article 24(2) of the MiFID implementing Directive]

Labelling of non-independent research

COBS 12.3.2R

A firm which produces or disseminates non-independent research must ensure that it:

  1. (1)

    is clearly identified as a marketing communication; and

  2. (2)

    contains a clear and prominent statement that (or, in the case of an oral recommendation, to the effect that) it:

    1. (a)

      has not been prepared in accordance with legal requirements designed to promote the independence of investment research; and

    2. (b)

      is not subject to any prohibition on dealing ahead of the dissemination of investment research.

[Note: article 24(2) of the MiFID implementing Directive]

COBS 12.3.3R

The financial promotion rules apply to non-independent research as though it were a marketing communication.

[Note: article 24(2) of the MiFID implementing Directive]

Management of conflicts of interest in area of non-independent research

COBS 12.3.4G

In accordance with SYSC 10, a firm will be expected to take reasonable steps to identify and manage conflicts of interest which may arise in the production of non-independent research. Situations where conflicts of interest can arise include:

  1. (1)

    relevant persons trading in financial instruments that are the subject of non-independent research which they know the firm has published or intends to publish before clients have had a reasonable opportunity to act on it (other than when the firm is acting as market maker in good faith and in the ordinary course of market making, or in the execution of an unsolicited client order); and

  2. (2)

    preparation of non-independent research which is intended firstly for internal use by the firm and then for later publication to clients.