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Policy for managing conflicts of interest

Throughout this document, references to “Research” include all research produced by Global Markets Research, comprising Equities Research, Economics, Credit, Commodities, Foreign Exchange, Fixed Income, Economics and Quantitative Research.

Frequency of reporting

Research is published either regularly (daily, weekly etc) or as driven by events.

The regular publications cover Equities, Economics, Credit, Debt, Currencies, Commodities and Quantitative Research.

The event driven style dominates in equities although when important events happen, when rates change, or when data is released, the other research areas will often respond by producing a one-off piece of research.

Supervision of analysts

Analysts who publish research reports are supervised by, and report to either a Senior Analyst or directly to the Head of Research Management (Equities Research), Head of Debt Research (Debt and Credit Research) or the Chief Economist (research other than Equities, Debt and Credit Research) (collectively referred to below as a “Head of Research”). A Head of Research has responsibility for the work of Analysts and are the final arbiters of editorial content. The exception with this is Equities Research, where a Supervisory Analyst is the final arbiter of editorial content.

A Head of Research reports into a Business Head – for example the Head of Institutional Equities (in the case of Equities Research).  A Business Head has only limited responsibility in respect of research – i.e. strategic direction and resource allocation. The respective Business Head has no accountability for the analysis or editorial content of specific research publications, the content of specific pieces of research, or involvement in the preparation, content or review of specific pieces of research.

Remuneration recommendations made by the respective Business Head in relation to any member of the Research team must be reviewed by Group Senior Management – comprising of either the Executive General Manager Client Coverage Group and Institutional Equities (Equities Research) or the Executive General Manager Global Markets (Research other than Equities Research), who make the final judgement on salaries and other compensation arrangements.. The decisions relating to compensation arrangements are also reviewed by the Group Executive, Institutional Banking & Markets.

Sign-off procedures

All Research is subject to strict editorial guidelines and procedures that require Research to be reviewed and approved before it is distributed to clients.

A material research change [1] must be signed-off by an appropriate review panel consisting of a Senior Analyst, a Head of Research and / or a Supervisory Analyst.

Only members of the Research Team can determine the comments and information that is to be included in Research Reports.


[1] A “Material Research Change” includes an initiation or cessation of coverage in a company, a recommendation change, or a material change in price target (+/-3%), valuation or earnings (+/-10%) forecast in the company

Initiation of Research Coverage (Equities only)

The decision on whether to initiate coverage of an Issuer is made by the Head of Equities Research Management in conjunction with the Research Analyst concerned.  The Head of Equities Research Management may consider whether coverage on an Issuer is aligned with the overall activities of the Bank, as well as whether the issuer is a new or existing client of the Bank.

Conflict of interest procedures

Potential conflicts of interest are controlled in a number of ways:

  • Research staff reporting lines are structured to remove or significantly limit an actual or potential conflict of interest;
  • No research staff report to client, trading or transactional areas, whose interests or functions may conflict with the research. These areas are also not involved in the determination of salary or bonuses, or in the content of their research;
  • Where research staff assist product or transaction teams, this is controlled by strict Chinese Wall  procedures;
  • Staff may not receive gifts or inducements;
  • Research staff make disclosures of personal interests;
  • Staff cannot hold stock in the sector they cover, their trading is strictly controlled, and subject to specific restrictions whenever they are preparing research, or before company results presentations;
  • The trading of all staff is subjected to a restricted list maintained by Compliance;
  • Draft Research Reports are not provided to, or reviewed by non-research personnel, although Research Analysts are permitted to check individual facts with companies before publication (without communicating the recommendations or opinions contained in the report);
  • We do not provide recommendations on our own company or its products;
  • There are strict barriers to prevent analysts having access to non-public information.
  • Research declares when members of the CBA Group own more than 1% of any company which is the subject of research.
  • We declare when members of the CBA  Group have provided material non-research services to subject companies in the past 12 months;
  • Non-research staff are prohibited from directing a research analyst to publish a Research Report and shall not direct the views and opinions expressed in a Research Report produced by Research.

Methodology of equities valuation

The valuation of equities involves significant data input combined with the judgement of the research team. Most teams produce a discounted cash flow model of the company concerned, consider price earnings ratios for comparable companies, and review a wide range of other standard metrics, which they combine with informed judgement to produce a final valuation.

Definitions used in making recommendations

CBA Institutional Equities investment recommendations are determined by the covering analyst and reflect the analyst’s assessment of a stock’s expected total shareholder return (TSR). Stock expected TSR is calculated as the difference between the analyst’s 12-month price target and the current share price plus the forecast dividend yield.


OVERWEIGHT Stocks with an Overweight recommendation represent the most attractive stocks under the analyst’s coverage. They are generally forecast to generate higher TSR compared to the rest of the analyst’s coverage.
NEUTRAL Stocks with a Neutral recommendation are less attractive than stocks with an Overweight recommendation. They are generally forecast to generate lower TSR compared to stocks with an Overweight recommendation in the analyst’s coverage.
UNDERWEIGHT Stocks with an Underweight recommendation are the least attractive stocks. They are generally forecast to generate lower TSR compared to stocks with a Neutral recommendation in the analyst’s coverage.

Note: CBA’s previous recommendations prior to 9 November 2012 were:

BUY: Stocks with a Buy recommendation represent the most attractive stocks under the analyst’s coverage. They are forecast to generate significantly positive expected total shareholder returns.

HOLD: Stocks with a Hold recommendation are less attractive than stocks with a Buy recommendation. They are forecast to generate flat to slightly positive expected total shareholder returns.

SELL: Stocks with a Sell recommendation are the least attractive stocks. They are forecast to generate flat or negative expected total shareholder returns.

CBA’s previous recommendations prior to 25 January 2010 were:

Short term (over 6 months): Buy –  appreciate by >10%,  Accumulate –  increase between 2% and 10%, Reduce –  increase by less than 2% or fall by up to 5%,Sell – fall by >5%.

Long term (24 months) Outperform (O / P) –  exceed market return by >5%, Market Perform (M / P) –  be in line with market return, +/-5%,  Under Perform (U / P) –  be less than market return by >5%.

Interests in the Bank above 5%

As at 31 March 2015, there are no shareholders who owned more than 5% of stock in the Commonwealth Bank.   

Structure of calls

As at 31 March 2015, the proportions of equity recommendations in each category are given below. As at 31 March 2015, we cover 195 securities


The following table details the calls we have on entities in which the CBA Group or its related body corporates had a lead or co-lead mandate during the 12 months to 30 March 2015



















All Investors: Commonwealth Securities Limited ABN 60 067 254 399 AFSL 238814 ("CommSec"), is a wholly owned, but non-guaranteed, subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124 AFSL 234945 ("the Bank"). The Bank and CommSec are incorporated in Australia with limited liability.  The Bank and its subsidiaries, including CommSec, Commonwealth Australia Securities LLC, CBA Europe Ltd and Commonwealth Research, are domestic or foreign entities or business areas of the Commonwealth Bank Group of Companies (CBGOC). 

This information on this site is published solely for informational purposes and is not to be construed as a solicitation or an offer to buy any securities or financial instrument and has been prepared without taking account of the objectives, financial situation and capacity to bear loss, knowledge, experience or needs of any specific person.  No member of the CBOGC does, or is required to, assess the appropriateness or suitability of the report for recipients who therefore do not benefit from any regulatory protections in this regard.  All recipients should, before acting on the information in this site, consider the appropriateness and suitability of the information, having regard to their own objectives, financial situation and needs, and, if necessary seek the appropriate professional, foreign exchange or financial advice regarding the content of this report.

We believe that the information in this site is correct and any opinions, conclusions or recommendations are reasonably held or made, based on the information available at the time of its compilation, but no representation or warranty, either expressed or implied, is made or provided as to accuracy, reliability or completeness of any statement made herein.