Conflicts of interest and associated conduct risks during the debt capital raising process

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Measure 1: Regulators should consider requiring firms to manage conflicts of interest that may arise in relation to the pricing of a debt securities offering, keeping the issuer informed of key decisions or actions which can influence the pricing outcome, and giving the issuer an opportunity to express its preference regarding the pricing of an issue during the pricing process.

Measure 2: Regulators should consider requiring firms to take reasonable steps to disclose to the issuer how any risk management transactions it intends to carry out for itself, the issuer, or investor clients, will not compromise the issuer’s interests in relation to pricing of the new issuance.

Measure 3: Regulators should encourage the timely provision of a range of information to investors in a debt securities offering, where distribution of such information is permitted under local law.

Measure 4: Regulators should consider requiring firms to have appropriate controls to identify, prevent where possible and manage any conflicts of interest that arise in the preparation of research on a debt securities offering.

Measure 5: Regulators should consider requiring firms to maintain an allocation policy that sets out their approach for determining allocations in a debt securities offering, and for the firm to regularly assess its compliance with the policy.

Measure 6: Regulators should encourage firms to consider their issuer client’s preferences e.g. investor profile and composition, when making allocation decisions or recommendations.

Measure 7: Regulators should consider requiring firms to have appropriate controls to identify, avoid where possible and manage any conflicts of interest that arise in the allocation recommendations of a debt securities offering.

Measure 8: Regulators should consider requiring firms to maintain records of allocation decisions to demonstrate that any conflicts of interest are appropriately managed.

Measure 9: Regulators should consider requiring firms to observe proper standards of market conduct, act with integrity, manage conflicts of interest, and to treat clients fairly when negotiating to secure a mandate for a debt capital raising.