The Securities Industry Committee on Analyst Standards is extending the comment period on its draft report.

The SICAS draft report, “Setting Analyst Standards: Recommendations for the supervision and practice of Canadian Securities Industry Analysts”, was issued for comment in March 2001. It is now extending the initial 60-day comment period until July 6 to accommodate several requests for an extension.

These comments will be taken into consideration, and the committee’s final report will be issued in the fall. The draft report makes recommendations for improving and ensuring analysts independence, primarily relying on disclosure of possible conflicts, but also demanding some explicit prohibitions.

The issue is also a hot one in the U.S., where Congress has just held hearings on the role of analysts. At the Investment Dealers Association annual conference in La Malbaie, Quebec, yesterday, a panel of analysts defended their role.

James McLeod, research director at RBC Dominion Securities, argued that although conflicts may exist and some of the obvious things should be prohibited, he cautioned against too much restriction, noting that market discipline acts as a good deterrent to egregious conduct. McLeod was part of the SIACS consultations.

Francis Roche, of Roche Securities, said that too much restriction would effectively end coverage of small caps by small dealers because they don’t have the scale to implement the sort of divisions between responsibilities that are easy at big dealers.