On January 24 2003, the Swiss Bankers Association (SBA) issued directives on the independence of financial research. The Federal Banking Commission (FBC) ratified these on January 29 2003 as minimal standards of self-regulation (code of conduct).
The new regulations impose the following requirements on banks' internal organization:
- there must be organizational, hierarchical and functional independence of research from units responsible for issuing securities, investment banking, sales and credits;
- analysts' remuneration must not depend on specific transactions;
- Chinese walls must be set up between analysts and traders, with information exchanged between the two rarely and under the supervision of the internal compliance team;
- there must be no front running;
- research reports must not be sent to investment bankers before publication. Contact with bankers can only be made for checking facts under supervision of the compliance department;
- analysts must disclose their participation in any issue of securities three years before publication of a report;
- the credit department must not pass on confidential client information; and
- banks cannot offer research on a listed company in which it holds more than 50% of the voting rights, must disclose holding a stake of between 5% and 50% and cannot report on or recommend companies within its own group.
The new regulations also impose the following requirements on banks' external relationships:
- reports and recommendations must be made available to all recipients of one client category at the same time;
- companies must treat all analysts equally;
- when receiving non-public information, the company must be informed of the disclosure in the report and the internal compliance team will then decide on its publication.
- a bank involved in an initial public offering may not publish reports for a period of 40 days after the first trading day. This "quiet period" lasts 10 days in the case of a secondary public offering;
- the research team must not share information with the company before publishing its report, except for the purposes of checking facts;
- analysts must not buy securities they have researched; and
- banks must publish the basic methodology used for their research and issue internal directives to that effect.