Conflicts of interest and IPOs

In mid-February, IOSCO published proposed measures on conflicts of interest identified in equity initial public offerings (equity IPOs) and secondary equity offerings. Eight measures were put forward, informed in particular by the new provisions set out by MiFID II in Europe.

AMAFI expressed support for IOSCO's initiative, which proposes common solutions at the international level (AMAFI / 18-20) to address the risks linked to the potential conflicts of interest that can arise during the production and dissemination of primary research and in the process of allocating securities and pricing transactions. AMAFI also stressed that most of the measures proposed by IOSCO do not pose real difficulties insofar as they are already part of French or European rules or applied under best market practices. It nevertheless requested clarification, particularly on the proposal to ban analysts from taking part in pitches. AMAFI called for the meaning of pitches to be precisely defined and stressed that issuers need to be able to hold discussions with analysts in order to understand the market context as well as the assessment made by investors of their shares. AMAFI also underlined the need for a more nuanced approach to the question of pressure on connected analysts (meaning those from establishments providing advisory for or managing the IPO) raised in IOSCO's document. In AMAFI's view, the possibility that analysts' opinions might be biased by such pressure is offset by the need for analysts and their employers to maintain their credibility and reputation.