Legal and Regulatory
Pillar 3 Disclosures
The policy for dealing with any possible conflicts of interest in relation to Research
1.1 This Policy Statement discloses the organisational and administrative arrangements within Numis Securities Limited (“Numis”) for the prevention and avoidance of conflicts of interest with respect to its research investment recommendations.
2. REGULATORY FRAMEWORK
2.1 Numis is authorised and regulated by the Financial Conduct Authority (the “FCA”).
2.2.1 the firm, including its managers, employees and appointed representatives, or any person directly or indirectly linked to them by control, and a client of the firm; or
2.3 Under the FCA’s Handbook, Numis is also required to disclose, in general terms, its organisational and administrative arrangements for the prevention and avoidance of conflicts of interest with respect to research investment recommendations.
3. NUMIS’ RESEARCH INVESTMENT RECOMMENDATIONS
3.1 Numis publishes research that is classified by the FCA as ‘non-independent research’. Non-independent research is a research investment recommendation that relates to financial instruments and does not constitute investment research.
3.2.1 It is labelled or described as investment research or in similar terms, or is otherwise presented as an objective or independent explanation of the matters contained in the investment recommendation.
4. HOW NUMIS IDENTIFIES CONFLICTS OF INTEREST
4.1 Numis has conducted a mapping exercise to identify potential sources of conflicts of interest within its business departments and within Numis as a whole. Numis’ conflicts map identifies potential sources of conflicts relating to the production and dissemination of its research. Potential sources of conflicts that have been identified include:
4.1.1 the independence of the research analysts versus other parties’ desires, such as: corporate entities’ desires for research to position them in a positive light; institutional investors’ desires for research to support their existing positions; and other Numis departments’ desires, for example Corporate Finance’s, desire for research to support their clients and transactions;
5. HOW NUMIS MANAGES CONFLICTS
5.1 Numis maintains and operates effective organisational and administrative arrangements for the prevention and avoidance of conflicts of interest.
5.2.1 Research specific arrangements
The Research Department has a specific policies and procedures manual which outlines in detail the requirements surrounding production and dissemination of Numis’ research. This explains to research analysts the controls in place relating to Numis’ research, including:
22.214.171.124 a physical segregation between the Research Department and Corporate Finance/Corporate Broking, with access to the latter restricted by card-key controlled doors;
5.2.2 Firm-wide arrangements
The arrangements which Numis has implemented on a firm-wide basis include:
126.96.36.199 Policies and procedures:
A number of Numis’ policies ensure that Numis and its employees act appropriately in situations which may give rise to conflicts of interest.
188.8.131.52 Chinese Walls:
Chinese Walls seek to act as an information barrier to prevent sensitive information from being passed between different business areas of Numis. Numis uses physical barriers to segregate the working spaces of employees with access to different information types. Numis also uses information flow barriers, whereby employees are not permitted to access and/or share certain information with employees in certain other business areas. Numis also utilises insider lists and wall crossing procedures.
184.108.40.206 Individual responsibility for management, identification and reporting of conflicts:
Numis employees have ultimate responsibility for identification of conflicts of interest. Through the conflicts policy and through training, Numis ensures that employees are aware of the extent and nature of the risk that their activities or business area poses in terms of conflicts of interest and are made familiar with the processes that should be followed in the event of a potential conflict arising.
Numis has a remuneration policy that is intended to ensure that Numis’ employees are not incentivised to engage in poor conduct or to act inappropriately in a conflicts of interest situation.
220.127.116.11 External business interests:
Numis’ employees are required to notify and obtain pre-approval from the Compliance and HR departments before accepting or participating in outside business interests and employment.
Numis may also disclose to its clients the nature of a particular conflict that has been identified by Numis if, for example, it feels that its arrangements are not sufficient to ensure that risks of damage to the interests of the client would be prevented. This is in order to allow the client to make an informed decision about the impact of the conflict.