Investment Ratings

Code of Conduct

Code of Conduct

1. Quality and Integrity of the Australia Ratings Analytics Process
A. Quality of the Rating Process

(1) Analysis is completed using publicly available information and material supplied by the client.
(2) Investment ratings are assigned according to Australia Ratings Analytics published criteria.
(3) Investment ratings and rating changes will be captured and reported in an historical ratings database.
(4) The Investment Committee oversees the consistent application of published criteria to the ratings assigned.
(5) Investment ratings will be determined by a majority vote of the Investment Committee. A quorum shall comprise three voting members.
(6) An electronic file of all investment ratings assigned will be maintained for any product or security rated for a period required by Australia Ratings Analytics' AFSL.
(7) The research reports issued by Australia Ratings Analytics will be reviewed by the Investment Committee to confirm the material and statements in the report are fair and reasonable and not misleading to investors.
(8) Analysis and reports will be completed by appropriately qualified and skilled personnel to ensure the rating outcome is of high quality.
(9) The analytical resources will be experienced in a number of asset classes to promote continuity of resource and avoid bias in rating outcomes.
(10) A formal review will be put in place to periodically review the methodologies and significant changes to the methodologies and models that Australia Ratings Analytics uses.

B. Monitoring and Updating
(1) Investment ratings will be monitored and reports updated on a regular basis.
(2) The quality of the investment and the fund manager will be reviewed using performance information and other relevant information available to Australia Ratings Analytics.
(3) Investment ratings will be adjusted on a timely basis through regular investment Committee meetings to reflect any change in the opinion of Australia Ratings Analytics due to an unanticipated development.
(4) All new investment ratings and changes to outstanding ratings will be released to the public via the company’s website and may also be released via media releases.
C. Integrity of the Rating Process
(1) Staff of Australia Ratings Analytics sign an annual certificate of their compliance with this Code of Conduct and adherence to relevant laws and regulations governing research providers in Australia.
(2) At all times Australia Ratings Analytics conducts business in a fair and honest manner.
(3) Australia Ratings Analytics uses experienced investment professionals to ensure its analysis and ratings are of a high standard.
(4) Investment ratings are determined by an Investment Committee process and no ratings are “guaranteed” prior to the completion of the requisite analysis and determination by the investment committee.
(5) Business will be conducted in accordance with the Australia Ratings Analytics Compliance Plan which will be reviewed periodically.
(6) The Board of Australia Ratings Analytics’ parent company, Australia Ratings Pty Ltd, will be instructed to receive and deal in an appropriate manner with any notification of any unethical or illegal action by a staff member.
2. Independence and Avoidance of Conflict of Interest
A. General

(1) Investment rating actions are to be taken as deemed appropriate based on factual information and determination of applicable criteria.
(2) Australian Ratings Analytics and its staff members will exhibit professionalism and act in an independent and objective manner in completing analysis and determining ratings.
(3) Ratings will be based on published methodology using publicly available information and any additional data supplied by clients.
(4) The primary business activity of Australia Ratings Analytics is the assessment of investment quality of managed funds and other investment products.

B. Procedures and Policies

(1) The activity of Australia Ratings Analytics and the engagement of analysts to complete investment ratings will be conducted in a manner to avoid any actual or potential conflicts of interest. The management of potential conflicts will be monitored by the Board of the parent company and through relevant disclosure.
(2) Australia Ratings Analytics will evaluate and monitor any actual or potential conflicts of interest at the time of client engagement and throughout the rating process. Disclosure of any conflict and the materiality of the conflict will be advised on rating reports and disclosed in a timely manner on the company’s website.
(3) Analysts are not permitted to engage in investment or trading activities which represent a conflict of interest.

C. Analyst and Employee Independence

(1) Analyst remuneration will be based on a standard remuneration contract.
(2) Analysts will not be directly involved in the negotiation of fees.
(3) Analysts will not be assigned to rate entities in which they have direct and personally material investment in the entity (or related entity) which could influence the determination of the rating. This does not preclude an analyst’s participation where the investment is through a diversified collective investment scheme. Further, analysts are not to be assigned to rate an entity for whom they, or an immediate family member, have worked or have a significant business relationship in the last six months.
(4) Analysts (or their spouse, partner or minor children) will not be permitted to invest or trade in securities or derivatives of any entity whose rating falls within the analyst’s area of responsibility.
(5) Analysts will be subject to the Australia Ratings Analytics Gift and Entertainment policy which requires entertainment and gifts for a value greater than $250 to be disclosed and recorded on the Australia Ratings Analytics Gift and Entertainment register.
(6) Any personal relationship with an employee of a rated entity will be disclosed to the Managing Director where the nature of the person’s role in the organisation is of significance in the rating of the organisation.
(7) Australia Ratings Analytics will review the past work of analysts that leave the company and join a rated organisation that the analyst has been involved in rating, or a financial services firm which the analyst has had significant dealings as part of the analyst's duties at Australia Ratings Analytics.

3. Responsibilities to the Investing Public and Clients
A. Transparency and Timeliness of Rating Disclosure

(1) Ratings will be released in a timely manner through the company’s website.
(2) Australia Ratings Analytics publishes its ratings and reports via the company website.
(3) The date of the last review of each rating will be disclosed on the rating and research report.
(4) Research reports will describe the basis of each rating and the justification of the rating assigned.
(5) Where an outstanding rating is changed, the justification for the change will be laid out in the update posted to the company’s website.
(6) Prior to the release of the rating, a client will be advised of the critical information to be analysed in determining each rating and be given time to correct any factual misperceptions in order to assist a valid rating being assigned by the Investment Committee.
(7) Australia Ratings Analytics will compile a historical database of its ratings.
(8) Material amendment to rating methodology and criteria will only be completed after an evaluation by the Investment Committee of the potential market impact and suitability of the new methodology.
(9) Australia Ratings Analytics will not engage in anti-competitive practices that will affect the integrity and quality of the ratings.

B. Treatment of Confidential Information

(1) The majority of analysis conducted by Australia Ratings Analytics to determine a rating shall use publicly available information. Where a client elects to disclose confidential information such information will only be used in completing the rating analysis and not disclosed to any third party.
(2) Any confidential information will only be used during the rating process and not disclosed unless the client makes such information available to the market.
(3) Analysts will protect any confidential information received to minimise the risk of its disclosure through theft or fraud.
(4) Analysts will be subject to trading black-out periods when any confidential information is being evaluated in determining a rating.
(5) Analysts will be required to comply with the Australia Ratings Analytics securities trading policy. Compliance with this policy will be certified by employees on a quarterly basis.
(6) Non-public information and potential future rating action should only be discussed with the client and not disclosed publicly.
(7) Use and disclosure of any confidential information should be restricted and used only within the context of the determination of the rating.
(8) Analysts should not utilise confidential information for personal gain.

4. Disclosure of Code of Conduct and Communication with Market Participants

(1) The Australia Ratings Analytics Code of Conduct is available upon request and will be updated from time to time to reflect the requirements of ASIC Regulatory Guide 79.
(2) One of the functions of the Board of the parent of Australia Ratings Analytics is to oversee governance of the rating business and compliance with the terms of the AFSL and communicate about any questions, concerns and complaints that Australia Ratings Analytics may receive.

Date: June 2018



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Melbourne, 25 September 2017

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