Securities industry regulation is upgraded again to promote the independence and quality of investment research report compilation. The Securities Association of China recently released the "Guidelines for Securities Companies on Providing Investment Value Research Reports", aiming to strengthen the standards of the investment value research report compilation process to avoid conflicts of interest.

The Guidelines consist of twenty-three clauses that establish normative requirements for the independence of the production of investment value research reports, cross-departmental management of analysts, and initial public offerings (IPO) roadshows, among other aspects.

To ensure the independence of investment value research reports, securities companies must maintain principled independence and regulate communication between securities analysts and the underwriting team or issuer to prevent conflicts of interest. Specific regulations include:

• Report-writing analysts need to maintain independent judgment and should not be influenced or interfered with by any party related to their own interests.
• Strictly prohibited discussions between analysts and any stakeholders about profit forecasts, valuations, or other investment analysis content before providing investment value research reports to offline investors.
• Chinese Wall management, where analysts must complete relevant approval procedures before participating in the report-writing process to avoid unauthorized leakage or use of information.
• Independent research, during the research of the issuer, investment bank personnel must not be present; analysts can verify the authenticity and accuracy of the information from the issuer, but should not involve profit forecasts and valuation analysis content.

On the other hand, the Guidelines also impose new requirements for IPO roadshows:

• Before the announcement of the IPO prospectus, analysts should not organize or participate in any form of project roadshow promotional activities.
• From the announcement of the IPO prospectus until the determination of the project issuance price or the termination of the issuance, other than the lead underwriter who may conduct a roadshow, no other securities company should invite or arrange for personnel associated with the issuer to participate in investor communications in any way.

In addition to this, the Guidelines also clearly stipulate how securities companies should commission their parent or subsidiary companies or underwriting group members to draft investment reports, as well as related internal management systems and self-regulatory measures.