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IP/06/1809

Brussels, 14 December 2006

Internal Market: Commission issues Communication on investment research

The European Commission has adopted a Communication taking stock of, and providing stakeholders with practical guidance on, the provisions of recent European legislation relating to investment research and financial analysts. The Communication responds to the report of the Forum Group on Financial Analysts, which helped inform the drafting of that legislation.

Internal Market and Services Commissioner Charlie McCreevy said: "This Communication will be of benefit to investment firms and independent financial analysts seeking guidance on the new provisions of the Market Abuse Directive and the Markets in Financial Instruments Directive (MiFID) about disclosure and management of conflicts of interest. We thank the Forum Group on Financial Analysts for its valuable work. We delayed our response to the Forum Group’s recommendations until the MiFID was finalised. The draft Communication is in line with our Better Regulation agenda, giving firms practical guidance on our rules. "

Since the collapse of the ‘new economy’ bubble in 2000 and several subsequent high-profile corporate collapses, the value and integrity of investment research, has been under increased regulatory scrutiny globally.

In Europe, the informal meeting of Economics and Finance Ministers in Oviedo in April 2002 discussed policy issues related to the Enron collapse in particular, and among other initiatives asked the Commission to consider possible regulatory action on investment research.

The purpose of the Communication is to take stock of, and to provide stakeholders with practical guidance on, the provisions of recent European legislation relating to investment research and financial analysts, and to respond to the report of the Forum Group on Financial Analysts, which helped inform the drafting of that legislation.

For the most part, this Communication deals with the issue of conflicts of interest, and describes the main European legislation specifically addressing that topic. In the final section, other issues are addressed (analyst registration, independent research, issuer relations with analysts and investor education).

The Communication and Annexes are available at:

http://ec.europa.eu/internal_market/securities/analysts/index_en.htm

The Communication will subsequently be published in all official languages in the Official Journal.


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