China drafted rules for setting up firewall between investment bankers and analysts in IPO deals

 

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The Securities Association of China drafted rules to set up a firewall between investment bankers and analysts in IPO deals to ensure unbiased pricing, the state-run Shanghai Securities News reported on Tuesday.

Bankers in an IPO deal are barred from discussing profit forecasts and valuations with analysts, who should make conclusions independently, the newspaper said, citing the drafted rules. Brokerages should also regularly check on their internal firewall systems, according to the rules, which were distributed to brokerages for their opinions, it said.

To avoid conflict of interest, investment bankers will be barred by the rules from discussing earnings estimates and valuations with analysts in an IPO deal, though they can communicate on the basics of the issuer in the presence of compliance officers, the paper said.

The rules also ban issuers, investment bankers and salespeople from exerting pressure on analysts to skew their research conclusions, the newspaper said.