• About the FSA
  • What we do
    • International and EU
      • Markets in Financial Instruments Directive (MiFID)
        • Key topics
          • Investment research

In this section, we give links to the information on investment research:

• the original MiFID text;
• links to our publications;
• the new rules;
• industry guidance;and
• Q&As.

The new rules on Investment research

The new rules on investment research are set out in COBS 12. You can access them via our full Handbook online through 'Business Standards' and 'COBS'. For MiFID firms, this will replace our current material in COB Chapter 7.16 and 7.17.

FSA publications

• Chapter 17, 'Investment Research', in CP06/19: Reforming Conduct of Business Regulation covers our proposals for rules and guidance on conflicts of interest that might arise in relation to the production and dissemination of research.
  
  The rules and guidance are applicable to firms within MIFID scope which produce, or arrange for the production of, research that is intended or likely to be disseminated to clients of the firm or to the public.
• Chapter 8 (Section B) of PS07/2: Implementing the Markets in Financial Instruments Directive (MiFID), states that the respondents to CP06/19 were broadly content with our proposals for copying out the MiFID provisions on investment research into COBS (January 2007). It made the rules that were essential for MiFID transposition.
• Chapter 15 of PS07/6: Reforming Conduct of Business Regulation - Feedback on CP06/19 and CP06/20 deals with the material consulted on in CP06/19 that was not essential to transpose MiFID in January 2007, namely guidance on independent research and non-independent research, and the rules and guidance to implement the Market Abuse Directive (MAD).
• We also set out our proposals to apply our MiFID-based standards for research to non-MiFID firms in Chapter 14 of CP07/9 - Conduct of Business regime: non-MiFID deferred matters (May 2007). Policy Statement 07/18 Conduct of Business Regime follows up on these matters.

 

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Investment research in the Level 1 and Level 2 MiFID text

MiFID comprises two levels of European legislation. 'Level 1', a Directive of the European Parliament and Council, was adopted in April 2004. In several areas, including conflicts of interest, Level 1 provides for its requirements to be supplemented by 'technical implementing measures' – known as Level 2 measures.

MiFID Level 1 Directive - Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004.

• Article 13(3) requires a firm to maintain and operate effective organisational and administrative arrangements with a view to taking all reasonable steps designed to prevent conflicts of interest from adversely affecting the interests of its clients.
• Article 18 requires firms to identify conflicts of interest and to clearly disclose such conflicts where organisational or administrative arrangements made to manage conflicts are not sufficient to ensure, with reasonable confidence, that risks of damage to client interests will be prevented.
• Article 19(2) provides that all information, including marketing information, addressed by the investment firm to clients or potential clients, be fair, clear and not misleading.

The Level 2 Directive Commission Directive

• Article 24 defines investment research and marketing communications.
• Article 25 details the additional organisational requirements where a firm produces and disseminates investment research.

European publications

The Commission's paper on investment research and financial analysts was published in December 2006. We believe the paper is consistent with COBS rules and guidance. See CP6/19 paragraph 15.8 for further detail.

Main paper

Industry guidance

MiFID Connect has issued industry guidance on our Investment Research Requirements, which you may find helpful.

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