On August 20, 2018 the Association for Financial Markets in Europe’s (AFME) Equity Capital Markets Division and the European Association for Independent Research Providers (Euro IRP) published guidance (AFME Guidance) for unconnected analysts (i.e. those not employed by the underwriting syndicate) seeking to access information about prospective issuers under the Financial Conduct Authority’s (FCA) new rules (in COBS 11A.1) governing initial public offerings (IPOs), which came into force on July 1, 2018.
Under the new rules (as set out in FCA policy statement PS 17/23) relating to the UK IPO process, unconnected analysts must now be provided with access to company information and to the management team of the share issuer (if such access has been provided to connected analysts) before connected analysts (i.e. those employed by or connected to the underwriting bank syndicate) publish their own research. In line with the FCA’s aim, the AFME Guidance seeks to ensure that assistance is given to market participants following the introduction of the new rules.
The AFME Guidance sets out a process by which syndicate banks can facilitate access for unconnected analysts to prospective issuers and contains guidelines which those unconnected analysts gaining access to companies undertaking an IPO are expected to sign.
The AFME Guidance covers how unconnected analysts can register their interest to be in communication with the issuer team, and the manner and form that such communications should take. It outlines two different processes, depending on whether the IPO candidate and syndicate banks have opted to allow unconnected analysts access to the issuer's team at the same time as connected analysts in accordance with COBS 11A.1.4B(2)(a), or whether such access will take place separately from connected analysts under COBS 11A.1.4B(2)(b). On either approach, unconnected analysts wishing to communicate with the issuer team must agree to comply with the Market Standard Research Guidelines set out in Appendix I to the AFME Guidance, including obligations to keep the IPO confidential until formal announcement and not to publish their research until the dates that connected analysts are permitted to publish their research under the applicable process.
The AFME Guidance also links to a list of unconnected analysts that issuers must notify in each case, and offer the opportunity to receive issuer information about the prospective IPO. The list currently comprises Euro IRP member firms interested in writing research on prospective IPOs, but will be expanded in due course to include unconnected analysts identified by other representative organisations.
(AFME: guidance on providing issuer access for unconnected analysts – Press release – 20.08.18)
(AFME: guidance on providing issuer access for unconnected analysts – 20.08.18)