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Conflicts of Interest regarding WH Ireland Limited Non-Independent Research

Overview

WH Ireland Limited (“WHI”) has processes, procedures and organisational arrangements to identify and manage potential conflicts of interest which may arise between its constituent businesses, including potential conflicts between its Research Department and its Corporate Finance, Sales, Trading and Market Making businesses accordingly.

Regulatory Background

WHI produce and disseminates research which is classified by the Financial Conduct Authority (the “FCA”) as non-independent research and is clearly labelled as a marketing communication, is a research investment recommendation and does not constitute investment research.

Non-independent research has not been prepared in accordance with legal requirements designed to promote the independence of investment research and it is not subject to any prohibition on dealing ahead of the dissemination of investment research.

A research investment recommendation is information recommending or suggesting an investment strategy explicitly or implicitly, concerning one or several financial instruments or the issuers, including any opinion as to the present or future value or price of such instruments, intended for distribution channels or for the public it does not constitute the provision of a personal recommendation.

In accordance with the FCA’s Conduct of Business Sourcebook 12 (“COBS 12”) WHI has policies and procedures in place to identify and manage conflicts of interest which may arise in the production and dissemination of non-independent research; the arrangements are summarised in the following paragraphs.

Research Content and Production

WHI non-independent research may be produced and published by WHI employees or delegated representatives defined as research analysts (“analysts”). Analysts publish research which aims to be impartial, clear, fair and not misleading. Analysts are required to observe high standards of integrity and ethical behaviour and to act at all times in the interest of WHI’s investing clients classified in the COBS rules as professional clients.  Non-independent research reports published should:

  • be based on publically available information;
  • be based on strict standards of honesty, frankness and fair dealing;
  • be presented in a manner such that they are clear, fair and not misleading; and
  • have a reasonable and where possible substantiated basis for the analysis and recommendations.

WHI arrangements provide guidance to analysts regarding the proper presentation of facts and opinions in research reports. Such arrangements are in place to ensure analysts:

  • have the independence to express their view and to prevent improper influence on analysts’ professional judgment;
  • have the impartiality to report, to the relevant authorities, any improper attempt to influence or restrict the expression of an analyst’s views;
  • do not issue research which contains hyperbolic language;
  • apply due skill, care and diligence when drafting research reports;
  • certify that the recommendations and opinions expressed in their reports accurately reflect their personal, independent and objective views about all of the investments or issuers to which the report relates; and
  • certify that no part of their remuneration was, is or will be directly or indirectly related to the specific recommendations or views expressed within their reports.

Research publication, including timing and method

It is the general practice of the research department to initiate research coverage in companies where WHI acts as a Nominated Adviser, broker, lead or co-lead manager or any other adviser in the  equity offering on behalf of the company once the issue is listed and in accordance with applicable regulations. WHI’s internal processes ensures that research is:

  • subject to disclosure requirements, including the relationship with subject companies as mentioned above, but also includes principle or market making activity disclosures and principle positions held by WHI its affiliates or relevant employees;
  • published or distributed only through its usual channels to ensure that they are made available simultaneously to the professional client base. Non-independent research may be made available to internal staff first before client distribution;
  • restricted from employee personal account dealing for 24 hours following any publication of research reports;
  • subject to peer review prior to the publication;
  • part of the investor education process and not part of the marketing when producing new issue research; and
  • restricted before or after a securities offering, to avoid any confusion between the research report and admission, offer or any other circular document, or to manage the perception that the research may not be impartial. The decision whether to impose such a restriction and the nature, timing and length of restriction appropriate will be made by senior management for research in consultation with the Compliance Department.

Analyst Activities, Monitoring and Training

Analysts must not do anything to give the impression that they are acting in the interests of an issuer, or any other stakeholder, rather than investors and the market as a whole.

Systems and controls implemented by WHI which prevent any inappropriate influences over analysts or the preparation of research reports include:

  • the provision of training, guidance and supervision on the identification, potential risks and escalation relating to conflicts as and when they arise;
  • monitoring of potential conflicts arising out of the publication of research in the period before, during and after a Corporate Finance transaction;
  • disclosing actual or potential conflicts such as market making and corporate finance activities;
  • prohibition on analysts to buy financial instruments in issuers under research coverage (analysts with an existing position, whether at initiation of coverage or as a new employee, will be dealt with on a case by case basis considering all conflict matters and is subject to a PA Dealing policy);
  • prohibition on analysts to write favourable research, target price or recommendation for receipt of remuneration or compensation.