NU Online News Service, Dec. 18, 2003, 4:28 p.m. EST – The Bond Market Association, New York, is seeking public comments on a draft of principles it has developed to ensure the independence of fixed-income product research in the United States and Europe.[@@]

Members of the association, which represents companies on both sides of the Atlantic, have spent a year developing the guidelines. The association has posted the draft at

The deadline for comments is Feb. 17, 2004. The association hopes to make final recommendations by March 1, 2004.

The association has come up with 10 basic principles:

– Firms should promote the integrity of fixed-income research and the ability of fixed-income research analysts to express their own independent views by establishing prohibitions on promising favorable fixed-income research and on retaliation against research analysts for research that may adversely affect a firm’s investment banking or sales and trading interests, and by ensuring decisions regarding fixed-income research coverage are made by research department personnel.

- Supervisory and management structures should insulate fixed-income research analysts from review, pressure and control by investment banking personnel, including reporting line structures and research analyst performance evaluations, maintaining physical separation where appropriate.

- Firms should take measures to prevent inappropriate influence by non-research department personnel and issuers over the content of fixed-income research reports and the timing of their publication.

- Fixed-income research analysts should be compensated in a manner designed to promote their independence.

- Firms should impose personal trading restrictions on fixed-income research analysts to manage potential conflicts of interest.

- Firms and fixed-income research analysts should inform investors of potential conflicts of interest that may affect fixed-income research.

- Fixed-income research analysts should not act as marketers or solicitors of investment banking services.

- Firms should manage potential conflicts of interest relating to their trading desks and the publication of fixed-income research, including establishing a prohibition on improperly trading securities and related derivative securities ahead of fixed-income research reports, and disclosing of potential conflicts of interest relating to the trading desk.

- Trader commentary, trading ideas and other analyses produced by trading desk personnel must be clearly identified as such, and as separate and distinct from research produced by the fixed-income research department.

- Firms should allocate sufficient supervisory resources to promote the integrity of the fixed-income research process, including establishing written policies and procedures and providing periodic training to research analysts, research managers and investment banking personnel.