Shearman & Sterling LLP | FinReg | International Organization of Securities Commissions Publishes Guidance on Conflicts of Interest in Debt Capital Raising
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  • International Organization of Securities Commissions Publishes Guidance on Conflicts of Interest in Debt Capital Raising
    09/21/2020
    The International Organization of Securities Commissions has published guidance on how to address potential conflicts of interest and associated conduct risks for intermediaries involved in the issuance of debt securities. Intermediaries may perform a variety of roles on a debt capital raising transaction and may also have a proprietary interest in the transaction itself.  In 2017, the IOSCO Board decided to examine conflicts of interest and other conduct risks in the capital raising process. IOSCO published guidance for the equity capital raising process in September 2018.

    IOSCO's guidance for the debt capital raising process sets out 9 key measures for regulators to manage conflict and associated conduct risks, including: (i) requiring firms to keep the issuer informed of key decisions which may influence pricing outcomes; (ii) requiring firms to disclose to issuers how any proposed risk management transactions will not compromise the issuer's interests; (iii) encouraging timely provision of information to investors; (iv) requiring firms to have appropriate controls to identify and manage conflicts of interest arising in the preparation of research on a debt securities offering; (v) requiring firms to have allocation policies determining allocations in a debt securities offering; and (vi) requiring firms to consider the issuer's preferences when making allocations.

    The guidance is not binding but IOSCO members are encouraged to consider it carefully in the context of their legal and regulatory framework.

    View IOSCO's final guidance.

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    TOPICS: COVID-19Securities