When the US launched its FD missile last fall, shell fragments rattled round the world. From Wall Street to the City of London, from corporations to lawyers to securities professionals, everyone shouted to be heard above the regulatory din of the SEC.
That’s a sharp contrast to the UK Financial Services Authority’s launch of a draft listings guidance manual at the end of June. In an appendix are new guidelines on the dissemination of price-sensitive information, which were last looked at in 1996. That’s big news for UK companies, yet it disappeared in the slipstream of financial news with hardly a ripple.
It’s not that the FSA is shy. The same week that the guidance manual came out, the laughing face of FSA chairman Sir Howard Davies was splashed across four columns of the FT over an article about how the regulator is gearing up to flex strong new policing powers in November. It was hard to tell, though, if he was just laughing at a good joke or chortling like a Dr Frankenstein having pieced together nine different agencies over four years to create a monster regulator.
UK companies have been bracing themselves for the FSA’s onslaught ever since it took over the UK Listing Authority in May 2000, and when FD came out, many expected similar soapboxing on this side of the Atlantic. Arthur Levitt had attacked selective disclosure as ‘a stain on the markets’; Davies didn’t disappoint when he greeted FD by condemning bad disclosure practices as ‘corrosive’.
The UK’s Sunday Business clearly expected some action when it announced – the day before Davies was to address Investor Relations magazine’s July 9 conference on award-winning IR – that he ‘will tomorrow warn of a crackdown by the City watchdog on poor corporate disclosure standards… [Companies] need to be more vigilant in keeping the market fully informed in a timely manner.’ Davies, for his part, seemed bemused by the newspaper’s sensational coverage and treated our delegates to a soft-shoe shuffle around the issues – no ‘warning’, no ‘crackdown’.
The FSA’s new guidelines demand close examination by UK companies and City players alike. They discuss webcasts and chat rooms, analyst guidance and response to press speculation. They set out a communications policy that every company should formally adapt and adopt. They moot the idea of ‘health warnings’ to be given out by companies with high R&D costs or cash burn like biotech and internet firms. They look at the gray area of identifying price-sensitive information and suggest each company create a ‘sensitivity list’. And they advise formal training for anyone with anything to do with external communications – a piece of advice the Investor Relations Society should pick up and run with.
The FSA’s new listing rules and accompanying guidance on price dissemination are Reg FD and more. So why did the explosive FD cause such shock waves while the UK’s version of a disclosure bomb fell in silence? Perhaps that’s just the British way.
