Introduction

J & E Davy, trading as Davy, is regulated by the Central Bank of Ireland. Davy is a member of the Irish Stock Exchange, the London Stock Exchange and Euronext.

For business in the UK, Davy is authorised by the Central Bank of Ireland and subject to limited regulation by the Financial Conduct Authority. Details about the extent of our regulation by the Financial Services Authority are available from us on request.

The firm currently offers a comprehensive range of stockbroking and related financial services to retail and professional clients. In addition to these services other members of the Davy Group offer corporate finance and broking services to our clients. This involves the provision of a full capital markets service i.e. advice on flotations, secondary offerings, disposals, mergers and acquisitions, share buy backs, refinancing etc. The firm also acts as sponsor to a number of companies listed on the Irish and London Stock Exchanges to whom we provide transactional and day to day advice on the application of the relevant Listing Rules.

Identification and management of potential conflicts

Due to the fact that Davy offers such a wide range of financial services, it is inevitable that a number of potential or actual conflicts exist. The senior management within Davy ensures that any actual or potential conflicts that may exist are kept under review on an ongoing basis and that appropriate controls are in place to identify and manage any such conflicts. This document is not intended to provide a comprehensive account of the controls and procedures in place to manage any such conflicts. However, it does seek to outline the main controls in place for managing any potential conflicts that may exist in relation to the production of investment research reports ("research reports") [1].

Reporting line of Research Analysts

Each analyst within the Research Department reports directly to the Head of Research. The corporate finance and corporate broking departments have no responsibility for the management of analysts.

Chinese walls/physical separation of the Research Department

Davy operates a strict Chinese walls policy to ensure that there are effective physical and logical barriers in place to prevent the passing of certain information. There are robust procedures and controls in place to safeguard the Chinese walls in place between Davy and Davy Corporate Finance Limited ("DCF"). As "DCF" and our Research department are both located at 49/50 Dawson Street, there is a particular awareness of the requirement to be able to demonstrate the strength of the Chinese Walls in place between those two entities, for example;

Physical access to DCF is restricted to corporate finance staff only.

Any information possessed by DCF on a company that it advises is segregated behind the Chinese Wall.

Transactions or potential transactions in which DCF is involved are discussed, even within the department, strictly on a "need to know" basis and as is standard practice in the industry code names are used to identify projects.

DCF and our Research department do not have access to each other's computer systems.

Remuneration of Research analysts

The remuneration of corporate finance personnel, on the one hand, and research and trading personnel, on the other hand, is entirely independent and neither division is incentivised on the basis of the performance of the other. The Head of Research is responsible for determining the remuneration of each analyst, and this is linked to the overall performance of Davy and in particular the institutional equity division. The overall performance of Davy also includes that of the corporate finance department. However, analyst remuneration is in no way linked to any individual transaction carried out. The evaluation and determination of compensation for Research analysts is completely separate from the investment banking business. In addition, each analyst certifies that no part of his or her compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed within a research report.

Personal account dealing

The MiFID Regulations and Market Abuse Regulations preclude all activities by employees in carrying out personal transactions that may give rise to a conflict of interest or are undertaken with access to inside information. Davy operates a strict staff dealing policy to regulate the conduct of personal accounts by its employees. Research analysts are required to obtain pre-authorisation by senior management for staff trades. This authorisation will not be given if there is a risk that to do so could lead to potential conflicts of interest. Research analysts are not permitted to trade contrary to a recommendation [2] and must not trade in the securities of a company that they cover where drafting a piece of investment research on that company. Staff are permitted to deal in securities with a view to medium and long-term investment only and short-term speculation is not permitted. The Compliance department within Davy is responsible monitoring staff dealing on an ongoing basis. Furthermore, where an analyst holds securities or another financial instrument of an issuer covered by them, this fact will be disclosed in the recommendation.

Involvement (if any) in non-research activities

There are strict procedures in place within Davy to ensure that an analyst is not involved in any activity that could affect his/her ability to provide an impartial assessment of the subject securities or issuers covered by that analyst.

Investors should be aware that Davy may provide investment banking services or may have acted as lead manager/co-lead manager to a company covered by the Research Department.

Principal trading within Davy

From time to time, Davy may hold a principal position in the securities and/or other financial instruments of a company covered by the Research Department. There are controls in place to ensure that those responsible for taking proprietary positions within Davy do not have access to any research reports prior to publication. We also have a dedicated team within our institutional settlements department, which is responsible solely for settlement of trades dealt by our proprietary trading book. Should an instance arise where Davy has a holding that exceeds 5% of the issued share capital of a company covered by Research, this will be disclosed within the research report. This shareholding includes proprietary positions and discretionary holdings. Details of these holdings are available on www.davy.ie/RegulatoryDisclosures.

Timing of publication

The Research Department determines the timing of the publication of any research reports. The Head of Research is responsible for determining which companies are covered by the Research Department. Davy does not have an agreement with any covered company specifically for the production of research reports, i.e. "paid-for research".

Research reports may be disclosed to the companies which are the subject of Davy research in advance of publication in order to correct for any factual inaccuracies. We are satisfied that this does not compromise the research report's objectivity.

Termination of coverage on an issuer

Davy has a detailed procedure in place to manage the various dealing and other restrictions which may apply in the event that we are a connected/concert party to an offeror or offeree company. These procedures ensure that any research reports related to the issuer are discontinued and any previous research reports published on the website are removed.

Training

All our analysts are made fully aware of both Davy internal rules related to the management of conflicts of interest and also their obligations in this area as outlined in the ISE Rules and the Market Abuse Regulations 2005 (as referred to above). Davy has an internal set of guidelines that all analysts have been provided with in order to assist them in understanding of these obligations. Each analyst must certify that he/she are fully aware of their obligations on an annual basis. Each analyst must also certify that the views expressed within the research recommendation accurately reflect his or her personal views about the securities or issuers referred to in the research recommendation.

Footnotes

[1] Davy produces ‘recommendations’ within the definition of the Market Abuse (Directive 2003/6/EC) Regulations 2005 and ‘investment research’ within the definition of the European Communities (Markets in Financial Instruments) Regulations 2007.

[2] Other than in exceptional circumstances as provided for in the MiFID Regulations.

Where any of the disclosures referred to in this conflicts of interest policy are disproportionate to the length of the research report, then these disclosures shall instead be made available on the Davy website.

Last updated: February 2014