Feb 262018
 

The International Organization of Securities Commissions (IOSCO) today is proposing a set of guidances to help addressing conflicts of interest (and consequent misconduct risks) that may arise during the equity capital raising process.

Conflicts of interest stemming from the role of intermediaries can threaten the integrity and efficiency of equity capital raising, damage investor confidence and undermine capital markets as an effective vehicle for issuers to raise funding.

To help regulators identify and address these issues, IOSCO has issued today the consultation report Conflicts of interest and associated conduct risks during the equity capital raising process. The report investigates the potential threats in each of the key stages of the equity rising process.

A specific guidance is published for any of the four recognised cathegories of conflicts of interest:

• Conflicts of interest during the preoffering phase of a capital raising;

• Conflicts of interest during the allocation of securities;

• Conflicts of interest in the pricing of securities

• Conflicts of interest and conduct risks stemming from personal transactions by staff employed within securities suppliers

IOSCO believes that the guidance could help enhance the range and quality of timely information made available to investors  and increase the efficiency and integrity of the overall process. Responses to a survey of IOSCO members indicated that different jurisdictions thend to have different market practices and different legal and regulatory frameworks in governing the equity capital raising process.

The severity of the conflicts of interest may thus vary across jurisdictions. The guidance is designed to provide IOSCO members with a degree of flexibility over how they implement the measures appropriately for each of the specific risks of single jurisdictions.

 

Conflicts of interest and associated conduct risks during the equity capital raising process (link)

 

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