What records should be kept by firms when providing underwriting or placing services and how should firms justify their final allocations to each investment client?

Answer 3

In order to be able to demonstrate to NCAs how they meet their obligations to the issuer client when providing underwriting and placing services, as well as their obligation to manage conflicts of interest between different clients or groups of clients, firms should have a process to record allocation decisions at material stages in the allocation process.

Records of allocations decisions should include:

a. The firm’s overarching allocation policy under Article 40(4) in force at the time of the commencement of the service;

b. The firm’s initial discussion with the issuer client and the agreed proposed allocation per type of investment client, as required by Article 40(5);

c. The content and timing of allocation requests received from each investment client with an indication of their type;

d. Where relevant, any further discussion and instructions or preferences provided by the issuer client, other members of the syndicate, or the firm itself, on the allocation process, including any emerging in light of allocation requests received from investment clients;

e. The final allocations registered in each individual investment client’s account.