The purpose of the Research Independence Policy of Bell Potter Securities Limited (Bell Potter Securities or the Company) is to confirm the independence and objectivity of Bell Potter Securities’ Research Reports pursuant to the guidance of its regulatory body, the Australian Securities and Investments Commission, through its Regulatory Guide 264 – Sell Side Research.
This Policy applies to all investment research prepared by the Research and Research Services Departments at Bell Potter Securities (Research Department). All Research Department, Corporate Advisory, Institutional and Private Client Service’s staff are required to abide by this Policy.
The Research Department at Bell Potter Securities is responsible for the timely and accurate flow of information about issuers, securities and financial products by way of investment Research for retail and wholesale clients of the Company. The quality of this Research has a significant impact on the quality of advice provided to those clients.
Research Reports must be based on verifiable facts and objective analysis of those facts and clearly disclose the reasons behind the opinions and recommendations contained in the Research Report, and must not be influenced by the interests of Bell Potter Securities (and its Associates), the Research Department, the Research Analyst, other departments of Bell Potter Securities or the entity which is the subject of the Research Report.
Bell Potter Securities’ Research Reports must be objective, unbiased and reflect the genuine personal opinion, judgement and expertise of the Research Analyst authoring the Research Report. Research Analysts can only include prospective information in a Research Report if the Research Analyst has reasonable grounds to do so.
Research Analysts will not interact with other Bell Potter Securities Departments or other Licensees’ Research Analysts with respect to the preparation of Research Reports nor will their views, models or draft Research Reports be communicated within Bell Potter Securities or to other Research Analysts outside of Bell Potter Securities or to any other external party in advance of the wide distribution of the Research Report, save for confirming the facts of the subject company contained in the Research Report with the subject company with all valuations and recommendation redacted.
PUBLICLY AVAILABLE INFORMATION
Bell Potter Securities’ Research Analysts will base all Research Reports on publicly available information and will not issue Research Reports or make Research Commentary when in possession of non-public information which is likely to have a material effect on the price or value of the security, the subject of the Research Report. Needless to say Research Analysts at Bell Potter Securities are able to assess the materiality of information that is not generally available and determine whether it will have a material effect on the price or value of the security, which if positive would constitute “inside information”, which must be reported immediately to Bell Potter Securities’ Compliance Department.
POTENTIAL CONFLICTS OF INTEREST
To protect the objectivity and independence of Bell Potter Securities’ Research it is necessary to ensure that Research Analysts are not compromised through their involvement in activities that might conflict with the generation of completely objective Research Reports.
To ensure the integrity of Bell Potter Securities’ Research Reports research management will ensue that all actual, apparent or potential conflicts of interest which may impact on the quality, integrity and reliability of the Company’s Research Reports are identified and either avoided altogether or adequately controlled and appropriately disclosed.
As Bell Potter Securities conducts multiple financial services within a single Financial Services Licence potential conflicts of interest can arise between the interests of the Company’s investing clients and its corporate advisory clients, as well as between the interests of the Company’s clients generally and the Company’s business interests and/or the personal interests of the Company’s employees.
Bell Potter Securities has robust Compliance and Control functions to ensure that conflicts of interest are managed appropriately.
RESEARCH ANALYST’ INDEPENDENCE
Bell Potter Securities maintains robust information barriers which protects the independence of its Research Department by way of physical (with security restrictions to control access to physical premises) and technological separation, which entail complete physical separation of the Research Department from all other Departments, including the Corporate Advisory Department.
The Company’s information barriers and conflict of interest management include Compliance Department managed “wall-crossing” procedures to enable Research Analysts in receipt of, or who are to be provided with, inside information (namely, information not generally available that will have a material impact on the price or value of a security), which bring the Research Analyst in from the public side of the Company’s business and over to the private side of the Company’s business.
Information about the initiation and cessation of Research Report coverage, changes to recommendations or price targets in Research Reports that have not been widely distributed is restricted to the Research Department until the Research Report has been widely distributed to clients.
Before the publication and release of a Research Report the Authoring Research Analyst will provide a written declaration to the Company’s Compliance Department that to the best of the Research Analyst’s knowledge the Analyst is not in receipt of “inside information” and the Research Report does not contain “inside information” and that no other part of Bell Potter Securities has made any attempt to influence the Research Report. When Research is initiated or there is a change in Recommendation or there is a material change to a Price Target (or Valuation) it will be subject to an additional and appropriate review process.
Information relating to unpublished Research Reports, Research Data, Research Analyst Models and Draft Research Reports must not be made available, or provided to any person, who is not part of the Company’s Research Department, except pursuant to the process to deal with requests from the non-public side of the Company’s business for Research Analyst’s models that underpin published Research Reports, which are managed with the oversight of the Compliance Department.
The scope for Bell Potter Securities’ Research Department to play a role in different types of capital raising varies, but the objectivity and independence of Research Analysts can potentially be compromised in the capital raising process notwithstanding that Bell Potter Securities’ Corporate Advisory Mandates will not include any commitment or inducement to provide Research Report coverage.
A Research Analyst can only be involved in discussions with Corporate Advisory with regard to a capital raising transaction, and the consequent receipt of Inside Information, if the Research Analyst has been wall-crossed under the oversight of the Compliance Department and ceases to produce Research Reports or provide Research Commentary until the information giving rise to the wall-crossing becomes generally available to the Market.
The Research Analyst will be free from any pressure from either Corporate Advisory or the prospective issuing company with respect to the initiation of Research Report coverage or the valuation of the prospective issuing company.
Interactions between the Company’s Research Analysts and Corporate Advisory are limited to administrative matters only and robust controls exist to insulate the Company’s Research Analysts from being influenced by the Company’s Corporate Advisory Department to produce a positive view of the issuing company or to increase its valuation.
INVESTOR EDUCATION REPORTS
Where the Company has been mandated to manage a capital raising it may be necessary to deploy a Research Analyst to prepare an Investor Education Report (IER) to assist in the education of institutional investors before the lodgement of a Prospectus with ASIC. In such circumstances Non-Research staff cannot access the Research Analyst’s research data, working files or draft IER and Corporate Advisory personnel cannot communicate with the Research Analyst before the IER is widely distributed and only then strictly in accordance with ASIC regulatory guidance with the oversight of the Compliance Department.
Bell Potter Securities Research funding is not linked to Corporate Advisory revenues, nor is Research Analyst remuneration linked to its contribution to corporate advisory revenues. Research Analysts are not supervised by staff from other departments, including Corporate, Institutional and Private Client Advisory. Research budgets are determined by the Research Department and the Managing Director of the Company.
RESEARCH COVERAGE COMMITTEE
Information about the initiation and cessation of Research Report coverage, changes to Recommendations or Price Targets/Valuations is restricted to the Research Department and is not subject to input or influence by other departments of the Company. The initiation and cessation of Research Report coverage of individual securities is the subject of a monthly Initiation and Cessation of Research Coverage Report appearing on the Company’s Client Access Website.
Any material interest which the Company (and its associates) and any interest which the author and authoriser of the Research Report have in the security which is the subject of a Research Report will be disclosed in the Research Report, including any Benefits they are likely to receive, their Relationship (if any) to the company the subject of the Research Report, and any Assistance provided by the company the subject of the Research Report in preparing the Research Report.