Commercial law firm Gilbert+Tobin has released a scathing critique of ASIC's new guidance on sell-side research contained in the recently released Consultation Paper 290.
While Gilbert+Tobin acknowledged that ASIC's existing guidance on sell-side research is too principles-based and needs to be updated, the law firm argued CP 290 "goes even further than the prescriptive international standards the global houses already comply with".
Furthermore, ASIC's proposed regulation for sell-side research would require a "compliance army", said Gilbert+Tobin – which would be a problem for many smaller research providers.
ASIC also "focuses the compliance burden on the analyst by making them personally accountable for misuse of material non-public information (MNPI) and interference by their colleagues".
Specifically, the consultation paper recommends that all interactions between analysts and an issuing company (in a capital raising or other transaction) should be intermediated by internal compliance staff.
ASIC has also rejected the integrity of individuals to comply with policies and protocols, which would result in the introduction of more oversight and involvement by compliance and affect the speed of publication, said Gilbert+Tobin.
However, the law firm points out that ASIC's recommendations "could have been worse" given the more restrictive rules overseas.
Pre-IPO research is banned in the US, and its timing is regulated in the UK.
Submissions to CP 290 are due by 31 August 2017.
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