Ontario Securities Commission Chair David Brown has endorsed two statements of principles issued yesterday by the International Organization of Securities Commissions (IOSCO).

The principles address conflicts of interest that securities analysts may face and assist credit rating agencies in providing investors with well informed, independent opinions and analyses.

“Through prohibitions of certain practices, such as trading in securities in advance of publishing reports on them, and the requirement of disclosure of other practices, such as disclosing any interest analysts may have in the securities on which they report, the IOSCO principles go right to the root of conflicts of interest,” said. Brown. “These principles set a high standard for analysts and their employers. Investors in jurisdictions that implement these principles will be able to rely on truly independent research.”

While the OSC does not regulate credit rating agencies, Brown noted that the standards issued by IOSCO set clear objectives that will assist credit rating agencies in assuring the independence of their research. “For investors to have confidence in them, ratings must be, and be seen to be, fully independent of any influence. The IOSCO principles give flexible guidance to credit rating agencies for practices that will reassure investors and issuers about the quality and independence of the analysis that the agencies provide,” said. Brown.

“The discussions around the IOSCO table allowed us to explore best practices from jurisdictions around the globe,” added Brown. “In Ontario, we should soon see the adoption of analyst standards developed by the Investment Dealers Association of Canada that are as robust as the IOSCO principles, and that will even exceed them in some areas.”

The IOSCO statements of principles are available at www.iosco.org