THE New York Stock Exchange (NYSE) and NASDAQ plan to eliminate rules that currently require listed companies to issue press releases when disclosing important information.
The NYSE has filed a proposed rule change (PDF 503KB, 18 pages) to amend its Listed Company Manual to allow listed companies to comply with its immediate release policy by disseminating the information “by any Regulation FD compliant method.”
If approved, the change will mean that NYSE-listed companies can use a wide variety of methods to make material news public, including using advisory releases and posting information on their websites or even in blog posts that meet the Securities and Exchange Commission’s (SEC) strict Reg. FD website posting requirements.
The exchange says it is making the change to harmonize its rules with Reg. FD and NASDAQ’s rules, and because “some companies wish to publicize material news through the company website.” The proposed rules will also apply to international companies listed on NYSE, even though they are exempt from Reg. FD.
However, it’s clear that the NYSE is making the change reluctantly. The proposed language of the rule continues to encourage companies to issue press releases, although the exchange will not require them to do so.
NASDAQ scrubbing references to “press releases”
Meanwhile, NASDAQ is moving faster to scrub its rules of references to “press releases.” Although the exchange already recognizes any Regulation FD-compliant method of disclosure, its listing rules still contain requirements for “press releases” in several areas. The rules also have not been fully updated to reflect the SEC’s recognition that standalone website postings can meet Reg. FD.
According to NASDAQ officials, the exchange will soon issue revised rules for SEC approval that will eliminate press release requirements in a number of areas where companies are already required to file information with the SEC.
News release requirements targeted to be scrapped include those for delisting determinations, public reprimand letters, going concern determinations, and international companies’ annual and interim reports.
It is not clear when the rule changes will come into effect. However, it’s unlikely that they will face opposition from the SEC, investors or public companies.
Of course, PR wire services like Business Wire that have benefitted from compulsory news releases are likely to object to the changes.
I have to admit, I’m a bit surprised the “powers-that-be” had the guts to take this step (finally). I only hope this forces companies to take their online IR strategies seriously and stop treating it like a plug-and-play necessity.
It’s a one small step towards a better competition on the content market. Companies will start using their websites and possibly other web-based media to disclose information and reach their investors, not just as a ‘good to have’ addition to the formal communications channel. Good idea!
Document linked to has been deleted
Thanks, Israel. I’ve changed the link to the document on the SEC’s website.
[...] is diminished. For a quick look at what is happening to the news release in Investor Relations, see NYSE, NASDAQ Move To Scrap Compulsory News Releases on [...]
Commercial barriers in disclosure practice is one of the main reasons of the system malfuction. Official information should reach the investors without any need for intermediation. The only problem is that we have not a free, high quality and well segmented channel that is able to efficiently connect the organizations to their audiences.
We at noodls are triyng to fill the gap and we already connect more than 20.000 leading organizations of the world (around 13,000 are listed comapanies).
I’m personally very glad to see that regulators are moving in this direction.
Check out what we are doing at http://www.noodls.com.