AFME publishes guidance on COBS

AFME has published guidance on financial analysts’ interaction with representatives of private companies and their financial advisers under the revised rules in COBS 12.2.21 which took effect in July. The change stemmed from the MiFID Org Reg, which states that financial analysts should not engage in activities other than the preparation of investment research where engaging in such activities would be inconsistent with the maintenance of that person’s objectivity, and that they should not participate in investment banking activities such as corporate finance business and underwriting, participating in pitches for new business or road shows for new issues of financial instruments – or otherwise being involved in the preparation of issuer marketing.

COBS now defined “participating in pitches for new business” as including where an analyst interacts with an issuer until the point where the firm has agreed to provide underwriting or placing services to the issuer or the extent of its engagement is otherwise confirmed in writing.

AFME has now set out a list of scenarios which its members think should lead to firms putting in place procedures that should govern further consultation or escalation by an analyst before deciding whether it can take place.

Emma Radmore