Stock Research
Emerging Companies
Sandstone Insights is a registered business name of MST Financial Pty Ltd (“MST” or “the Firm”).
This Policy has been written in accordance with the applicable laws and regulations governing the provision of Investment Research in the jurisdictions in which it operates. As a holder of an Australian Financial Services Licence (AFSL: 500557), and a provider of research reports, MST Financial Services Pty Ltd is required to comply with section 912A(1) of the Corporations Act, ASIC regulations RG 181 (Licensing: Managing conflicts of interest) and RG 79 (Research report providers: Improving the quality of investment research), and any other regulation that address conflicts of interest.
This Policy applies to investment research published by its research division (“Sandstone Insights”), and explains how conflicts of interest are identified, assessed and controlled by MST as they relate to the provision of research services. Representatives of MST involved with the publishing of investment research (“Analysts”) are governed by internal policies and procedures including this Policy and the Code of Conduct.
This Policy is available from MST upon request and can be found on the public website at www.sandstoneinsights.com.au. It may be amended at any time.
ASIC RG 181 defines Conflicts of Interest as “circumstances where some or all of the interests of people (clients) to whom a licensee (or its representative) provides financial services are inconsistent with, or diverge from, some or all of the interests of the licensee or its representatives. This includes actual, apparent and potential conflicts of interest.”
This might include:
Throughout this Policy a reference to a ‘conflict of interest’ includes an actual, potential or apparent conflict of interest.
Policies and procedures have been implemented that are designed to ensure that the Firm is able to identify and manage conflicts of interests consistently and appropriately. Conflicts may arise in various ways, including between the Firm, its representatives, and its clients, and between its business units.
The conflicts management obligation in the Corporations Act requires that the Firm has adequate arrangements to manage conflicts of interest (s912A(1)(aa)) and take reasonable steps to ensure that conflicts of interest a) do not compromise the independence and integrity of the advice it gives in its research; b) do not result in MST breaching its duties including (but not limited to) the duty to act efficiently, honestly and fairly; and c) are adequately disclosed.
MST provides training to its representatives on the identification of potential conflicts. All representatives are responsible for reporting identified conflicts of interest (be it actual or potential) to their supervisors or Compliance.
Identified conflicts as it relates to the provision of research services are outlined below:
At all times, MST considers the impact of conflicts whilst developing its business model and adopts appropriate controls to preserve the objectivity and independence of the research process and outcome. In particular, MST provides financial services other than research including investment banking, corporate advisory and dealing services. To the extent that those activities create actual, potential, or perceived conflicts with Sandstone Insights research, MST has processes in place to manage them including information barriers and segregation between its research staff and other business units. Where an identified conflict cannot be managed, or risks the integrity of the Firm, the conflict will be avoided.
To protect the objectivity and independence of the research process and outcomes, MST has robust information barriers separating the Analysts from MST’s other business activities. The implementation of Information Barriers ensure that Analysts involved with the research process are segregated from other staff. These measures include the installation of physical floor to ceiling barriers with access limited to Analysts only as well as access restrictions to electronic files used by research staff.
It is MST’s policy that Analysts cannot trade the stock they cover. Exceptions may be made for the disposal of a) positions already held before commencing with the firm or initiating coverage, or b) positions obtained resulting from a corporate action (such as merger or involuntary acquisition) or fund distribution.
Where trading is permitted, Analysts are required to comply with the Firm’s internal policies regarding Personal Account and Dealing.
Analysts are permitted to attend and speak at widely-attended conferences or other events, such as investor presentations, at which staff of other business units may also be present.
The Firm prohibits its Analysts from engaging in activity or behaviour that may (or be perceived to) unduly influence their views, solicit benefits, secure the business of corporate clients or otherwise generate revenues for MST’s other businesses through the publication of their research.
Communications between an Analyst and non-research personnel that could be perceived to unduly influence an Analysts view are restricted. An Analyst may not be directed to publish a research report, or to publish specific views and opinions that are not their own.
MST, like many other research report providers, filter the financial products covered to provide in-depth research on a smaller portfolio of products. Coverage decisions are made by the covering Analyst in consultation with the Sandstone Insights Head of Investment Strategy and compliance with the Firm’s policies as well as any applicable laws and regulations. The Analysts' coverage is primarily focused on companies within the S&P/ASX100 index. Companies outside of the S&P/ASX100 Index may be considered for coverage conditional on their investment merit and appeal. Sandstone Insights may occasionally discontinue coverage of securities. Where the Firm begins or ceases to cover a financial product, or class of product, MST will notify its clients via email and its website, advising reasons for the change.
The timing of research is determined at the discretion of the research team subject to any publication restrictions imposed be the compliance department. Other business units of the Firm have no control, or input into, the timing of research publications.
MST aims to disclose any material conflicts of interest to users of research such that users are able to form a realistic view about the potential impact of those conflicts on the quality and objectivity of Sandstone Insights. The Firm will disclose such conflicts via publication in the disclosure annexure of each report, and/or in its General Disclaimers and Disclosures.
Research Reports are monitored by both the Internal Review Committee and the Compliance Team to ensure reports are based on reasonable grounds; compliant with all laws and/or regulatory guidance; and reflect the view of the Analyst. The Compliance Team monitors the application of its Policies as it relates to the publication of Research and its other business units to ensure that any conflicts of interest are appropriately addressed and disclosed as required.
All research reports of a material nature, including changes of recommendation, earnings, forecasts, or price targets greater than 10%, are reviewed and approved by a member of the Internal Review Committee. Individual analysts are required to certify that reports of a non-material nature, which may update or convey information, do not convey material changes.
Sandstone Insights operates independently from MST’s other business activities and as such, its analysts are not supervised by other areas of the Firm. Senior Analysts report directly to the Senior Management Team of the MST. Research reports should not be viewed by members of other business units unless required to confirm factual accuracy. In these cases, viewing will be restricted and supervised by a Senior Analyst or member of the Internal Review Committee.