Code of Conduct

I. Introduction

Financial markets should be efficient and information should be available to all market participants. Thomas Murray Network Management Ltd. and its affiliates ("Thomas Murray") provide opinions in the form of Risk Assessments ('RAs'), Risk Assessment Reports and related research about the post trade securities markets around the world and service providers for custody, transfer agency, fund accounting and other related services, both in the traditional and alternative investment arenas.

The RAs are forward-looking opinions that Thomas Murray provides to help banks, brokers, infrastructural entities and other participants sift through the vast amount of information available and analyse some of the post trade risks they face when investing in a given market and/or some of the factors to consider when appointing a service provider. For publicly disseminated RAs, where the provider has decided to make the RA public, Thomas Murray makes them available to market participants globally on a contemporaneous basis, publicly.

In order to enhance market understanding and confidence in Thomas Murray's RAs, Thomas Murray has adopted this Code of Professional Conduct ("Code"). Through this Code, Thomas Murray seeks to protect the integrity of the assessment processes, to ensure that investors and service providers are treated fairly, and to safeguard confidential information provided to Thomas Murray. To use Thomas Murray assessments effectively, the market should be informed of both their attributes and limitations. It is the responsibility of Thomas Murray to be as transparent as practicable with respect to our:

  • RA methodologies; and
  • RA policies and practices.

This Code, as well as associated policies and methodologies, is accessible on Thomas Murray's public websites.

The Code is organised into three sections:

  • The Quality and Integrity of the RA Process;
  • Independence and the Avoidance of Conflicts of Interest; and,
  • Responsibilities to market participants and service providers

II. Definitions

For the purposes of this document, the terms below are defined as follows:

  • International Organisation of Securities Commissions' Code of Conduct
    Fundamentals for Credit Rating Agencies ("IOSCO Code")
    is a framework Code of Conduct published on December 23, 2004 by the International Organisation of Securities Commissions. It was developed through cooperative efforts of international securities regulatory authorities, rating agencies, issuers and other market participants.
  • International Organisation of Securities Commissions’ Principles Regarding the Activities of Credit Rating Agencies ("IOSCO Principles") is a set of broad principles developed by the international regulatory community and published on September 25, 2003. The IOSCO Principles is the document upon which the IOSCO Code is based.
  • Thomas Murray is Thomas Murray Network Management Ltd. and each of its subsidiaries, or other affiliated entities. Thomas Murray’s primary business is risk assessments of the post trade capital markets, capital market entities, service providers and related research both in the traditional and alternative investment arenas.
  • An Employee is any individual who works for Thomas Murray in any capacity.
  • An Analyst is an Employee whose primary function is participation in the RA process.
  • Management or Managers are those Employees who have personnel management responsibilities.
  • Thomas Murray’s Code of Professional Conduct (the "Code") is this code of conduct for Thomas Murray’s risk assessment and associated research businesses. The Code governs the conduct of:
    • a) Thomas Murray; and
    • b) All Thomas Murray’s Employees whether employed in a full-time or part time capacity.
  • Confidential Information is any information received by Thomas Murray in connection with the rating or assessment process in respect of which Thomas Murray has received notice specifically indicating the proprietary and confidential nature of the information. However, the term "Confidential Information" shall not include:
    • a) Information that is or later becomes publicly known;
    • b) Information available to Thomas Murray on a non-confidential basis prior to disclosure by the assessed entity or its agents;
    • c) Information that becomes available to Thomas Murray on a non-confidential basis from a third party not reasonably known by Thomas Murray to be bound by a confidentiality agreement with the assessed entity or otherwise prohibited from making available such information; or
    • d) Information developed independently by Thomas Murray without reference to the Confidential Information.
  • The Chief Risk Officer is responsible for Thomas Murray and its Employees’ compliance with the policies and procedures described in this Code and contact with market participants in respect of Thomas Murray’s adherence to the code. The contact for the Chief Risk Officer is Nicholas M Bradley, by email:
  • The Risk Committee is the committee which formulates and approves high level rating and assessment policies for each of the risk assessments and approves all public RAs. The composition of the committee may change from time to time in response to changing conditions. There are sub-committees formed for each specialised RA type group, with delegated authority to approve non-public RAs.

III. The Code

1. Quality and Integrity of the RA Processes

As described in the IOSCO Principles, Thomas Murray will endeavour to provide forward-looking opinions on the post trade capital markets, capital market infrastructural entities, service providers (together "entities") and related research both in the traditional and alternative investment arenas.

A. Quality of the RA Processes

1.1 Since RAs are opinions about service performance of an entity and/or some of the risks involved in using that entity, the performance of a RA will not be judged on the basis of any individual outcome from the use of that entity, but on whether the individual RA was formed pursuant to Thomas Murray’s established processes.

1.2 Thomas Murray will develop and maintain rigorous and systematic RA methodologies. The Risk Comittee will be responsible for monitoring the appropriateness and completeness of RA methodologies and procedures, and for approving any significant changes to RA methodologies and procedures. It will also be responsible for approving individual publicly disseminated RAs.

1.3 Analysts involved in the preparation or review of any RA will use Thomas Murray’s methodologies. Analysts will apply a given methodology in a consistent manner, as determined by Thomas Murray.

1.4 Non-public RAs will be determined by the Risk Committee and not by any individual Analyst. RAs will reflect consideration of all information known, and believed to be relevant, by the applicable Analyst and the Risk Committee, in a manner generally consistent with published methodologies. In formulating RAs, Thomas Murray will employ Analysts who, individually or collectively, have appropriate knowledge and experience in developing a risk assessment opinion for the type of entity being analysed.

1.5 Thomas Murray will maintain internal records to support its RAs in accordance with internal record retention policies and applicable law.

1.6 Thomas Murray and its Analysts will take steps to avoid issuing any RAs, research or reports that knowingly contain misrepresentations or are otherwise misleading.

1.7 Thomas Murray will invest resources sufficient to carry out high-quality RAs and research. When deciding whether to assign, modify or continue a RA,of an entity, Thomas Murray will consider whether it is able to devote sufficient personnel with appropriate skills to formulate a proper assessment, and whether its personnel are likely to have access to sufficient information in order to make such an assessment.

1.8 Thomas Murray will organise its Risk Committee to promote continuity and avoid bias in the rating and assessment processes. The Chair of the Risk Committee will be the Chief Risk Officer.

B. Monitoring and Updating

1.9 Except for RAs that clearly indicate they do not entail ongoing surveillance, once a RA is published, Thomas Murray will monitor the RA on an ongoing basis and update it by:

1.9.1 Periodically reviewing the relevant entity;

1.9.2 Initiating a review of the RA of the entity upon becoming aware of any information that might reasonably be expected to result in a RA change, consistent with the applicable methodology; and

1.9.3 Updating on a timely basis the RA, as appropriate, based on the results of such review.

1.10 Thomas Murray will announce via press release if it discontinues a public RA which has been previously published, if appropriate.

C. Integrity of the RA Process

1.11 Thomas Murray and its Employees will comply with all applicable laws and regulations governing their activities in the jurisdictions in which Thomas Murray operates.

1.12 Thomas Murray and its Employees will deal fairly and honestly with all assessed entities, their agents and all market participants.

1.13 Thomas Murray will hold its Employees to high standards of integrity. Thomas Murray will not knowingly employ any individuals with demonstrably compromised integrity.

1.14 Thomas Murray and its Analysts will not, either implicitly or explicitly, give any assurance or guarantee of a particular RA prior to approval bv the Risk Committee.

1.15 The Chief Risk Officer will be responsible for assessing adherence to the various procedural provisions of this Code. The reporting line of the Chief Risk Officer will be independent of Thomas Murray’s RA analytical operations.

1.16 While Employees are not expected to be experts in the law, they are expected to report activities of which they are aware that a reasonable person would question as a potential violation of the law or this Code. Any Manager or officer who receives such a report from an Employee is obligated to report it promptly to the Chief Risk Officer, which will take appropriate action, as determined by the laws and regulations of the jurisdiction and the rules and guidelines set forth by Thomas Murray.

1.17 Thomas Murray’s management will prohibit retaliation by any Employee or by Thomas Murray itself against any Employee who, in good faith, reports a possible violation of the law or this Code.

2. Independence and Management of Conflicts of Interest

A. General

2.1 Thomas Murray will not forbear or refrain from taking amending, terminating or assigning a RA based on the potential effect of the action on Thomas Murray, the entity or other market participant.

2.2 Thomas Murray and its Analysts will use care and professional judgment to maintain both the substance and appearance of independence and objectivity.

2.3 The determination of a RA will be influenced only by factors relevant to that RA.

2.4 The RA Thomas Murray assigns to an entity will not be affected by the existence of, or potential for, a business relationship between Thomas Murray and the entity (or its affiliates) or any other party, or the non-existence of any such relationship.

2.5 Thomas Murray will, as far as practicably possible, separate its RA business and Analysts from other businesses that may reasonably present a conflict of interest or the appearance of a conflict of interest. Thomas Murray will ensure that any existing or future business operations that do not necessarily present conflicts of interest with the RA businesses have in place procedures and mechanisms, to minimise the likelihood that those conflicts of interest will arise.

B. Procedures and Policies

2.6 Thomas Murray will adopt procedures and mechanisms to identify; and eliminate, or manage and disclose, as appropriate, actual or potential conflicts of interest that may influence the opinions and analyses Thomas Murray makes or the judgment and analyses of Employees who have an influence on RA decisions.

2.7 Thomas Murray disclosures of known actual and potential conflicts of interest will be complete, timely, clear, concise, specific and prominent.

2.8 Thomas Murray will disclose the general nature of its compensation arrangements with assessed entities, including whether it receives compensation unrelated to its assessments and related research.

2.9 Thomas Murray and its Employees will not engage in any securities or derivatives trading that present conflicts of interest with RA activities.

2.10 In instances where assessed entities or entities related to them (for example affiliates of governments which also have a regulatory function) have, or are simultaneously pursuing, regulatory oversight functions related to Thomas Murray, Thomas Murray will use different Employees to conduct its RA evaluations for such entities than those Employees involved in its oversight issues.

C. Analyst and Employee Independence

2.11 Reporting lines for Employees and their compensation arrangements will be organised to eliminate or effectively manage actual and potential conflicts of interest. Analysts will not be compensated or evaluated on the basis of the amount of revenue derived from entities that the Analyst rates or with which the Analyst regularly interacts.

2.12 Analysts that are directly involved in the RA process will not initiate, or participate in, discussions regarding fees or payments with such entity.

2.13 No employee will participate in or otherwise influence the determination of the RA of any particular entity or obligation if the Employee:

2.13.1 Directly owns securities or derivatives of the assessed entity;

2.13.2 Directly owns securities or derivatives of any entity related to an assessed entity, the ownership of which may cause or may be perceived as causing a conflict of interest;

2.13.3 Has had a recent employment or other significant business relationship with the assessed entity that may cause or may be perceived as causing a conflict of interest;

2.13.4 Has an immediate relation (i.e., a spouse, partner, parent, child, or sibling) who currently works for the assessed entity; or

2.13.5 Has, or had, any other relationship with the assessed entity or any related entity thereof that may cause or may be perceived as causing a conflict of interest.

2.14 Employees who are involved in the assessment processes (or their spouse, partner or minor children) are prohibited from buying, selling or engaging in any transaction in any security or derivative of any security issued, guaranteed, or otherwise supported by any entity within such Employee’s area of primary analytical responsibility.

2.1.15 For the avoidance of doubt, ownership of securities of such entities via collective investment schemes such as OEIC’s is permitted, provided the Employee is not involved in the selection of the securities the scheme invests in.

2.16 Employees are prohibited from soliciting money, gifts or favours from anyone with whom Thomas Murray does business and are prohibited from accepting gifts or favours from such persons or entities other than those expressly sanctioned by their Manager.

2.17 Any Analyst or Manager who becomes involved in any personal relationship that creates the potential for any real or apparent conflict of interest (including, for example, any personal relationship with an employee of an assessed entity or agent of such entity within his or her area of analytical responsibility) will be required, subject to applicable law, to disclose such relationship to either their Manager or to the Chief Risk Officer. Based on the assessment of this information, Thomas Murray will take appropriate steps to mitigate the real or apparent conflict.

3. Responsibilities to users and Market Participants

A. Transparency and Timeliness of Ratings and Assessments Disclosures

3.1 Thomas Murray will distribute as soon as practicable any changes to RAs regarding the entities it assesses. Some Thomas Murray RAs are by their nature either private (kept in confidence between Thomas Murray, the assessed entity and the institution commissioning the assessment) or proprietary (kept in confidence between Thomas Murray, the assessed entity and the subscribers to the proprietary information service).

3.2 Thomas Murray will make public assessment actions available publicly, where the entity has chosen to make the RA public. Such actions will be posted on Thomas Murray’s public website and through simultaneous transmission to the news media as well as via electronic or print subscription services.

3.3 By agreement with an entity, Thomas Murray may agree to keep a RA confidential.

3.4 In each of its RA press releases, Thomas Murray will reference the last associated RA or assessment action.

3.5 Thomas Murray will publish sufficient information about its procedures, methodologies and any assumptions that deviate materially from information contained in the entities published information so that market professionals can understand how the RA was made.

3.6 When issuing or revising a RA, Thomas Murray will explain in its press releases and reports the key elements underlying the RA.

3.7 Where feasible and appropriate, prior to issuing or revising a public RA, Thomas Murray will inform the entity of the critical information and principal considerations upon which the RA is based and afford the entity an opportunity to submit additional factual information not previously available, or clarify any likely factual misperceptions in order to produce a well-informed RA. Thomas Murray will duly evaluate the entities response. Where in particular circumstances, Thomas Murray has not informed the entity prior to issuing or revising a RA, Thomas Murray will inform the entity as soon as practicable thereafter and, generally, will explain the reason for the delay.

3.8 Thomas Murray will allow the entity a brief period of time, which may vary depending on the circumstances, to notify Thomas Murray of the entities desire to appeal the RA decision. Appeals must be based on information not previously available to the entity or not previously communicated to Thomas Murray.

3.9 In order to promote transparency Thomas Murray will clearly designate and disclose RAs where the entity has not itself participated.

3.10 Thomas Murray will publicly disclose via press release and posting on its web site any material modifications to its RA methodologies and related significant practices, procedures, and processes. Thomas Murray will carefully consider the various uses of RAs before modifying its RA methodologies, practices, procedures and processes.

3.11 As a publisher of research and articles related to its RAs, Thomas Murray will seek to provide clear, accurate, transparent and high quality research and articles about RAs. Sales processes shall be separated from the RA processes in ways that help protect the latter activities from improper conflicts of interest. Non-public information about Thomas Murray’s future assessment actions may not be selectively disclosed to research subscribers or others.

B. Treatment of Confidential Information

3.12 Thomas Murray and its Employees will:

3.12.1 Preserve the confidentiality of Confidential Information communicated to them by an entity or its agent; and

3.12.2 Unless they have received permission from the entity, refrain from disclosing Confidential Information in press releases, through research conferences, conversations with investors, market participants or others.

3.12.3 Notwithstanding the foregoing, Thomas Murray shall not be restricted from:

  • (a) Publishing any RA or other opinion regarding a particular entity which incorporates Confidential Information without specifically disclosing it;
  • (b) Using third party contractors or agents bound by appropriate confidentiality obligations to assist in any aspect of the RA process or related business activities; or
  • (c) Disclosing information as required by any applicable law, rule, or regulation, or at the request of any governmental agency or authority.

3.13 Thomas Murray will use Confidential Information only for purposes related to its RA activities.

3.14 Employees will take all reasonable measures to protect all property and records belonging to or in possession of Thomas Murray from fraud, theft or misuse.

3.15 In accordance with Thomas Murray’s internal securities trading policies, Employees will be prohibited from engaging in transactions in securities and derivatives when they possess Confidential Information concerning the issuer of such securities whether because of a RA or otherwise.

3.16 Employees will familiarise themselves with internal securities trading policies.

3.17 Employees will not disclose any non-public information about RA opinions or possible future RA actions, except to the entity or its designated agents.

3.18 Employees will not share Confidential Information with employees of any affiliated entities except to the extent such employees are acting as agents of Thomas Murray with respect to the RA process, and are bound by appropriate confidentiality obligations. Employees will not share Confidential Information within Thomas Murray except on a "reason-to-know" basis.

3.19 Employees will not use or share Confidential Information for the purpose of trading securities, or for any other purpose except for purposes related to the RA activities.

3.19.1 Except as required under any applicable law, rule, regulation, or at the proper request of any governmental agency or authority, internal deliberations and the identities of persons who participated in a Risk Committee will be kept strictly confidential and will not be disclosed to persons outside of Thomas Murray.

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

4.1 Management will be responsible for the implementation and the enforcement of the Code.

4.2 The provisions of this Code are derived from the IOSCO Principles and the IOSCO Code. However, Thomas Murray made certain modifications to more closely correspond to Thomas Murray’s business model and practices.

4.3 With respect to the subjective standards that are incorporated in this Code, Thomas Murray will use its good faith efforts in implementing such standards.

4.4 This Code, and any modifications made to it going forward, will be made public and readily accessible via Thomas Murray’s web sites.

4.5 The Chief Risk Officer is charged with communicating with market participants or stakeholders about any questions, concerns or complaints that may be received about Thomas Murray’s adherence with the Code.