UK to move to competitive model for company announcements

The prospective primary information provider services (PIP services) include RNS itself, which is owned and operated by the London Stock Exchange, Business Wire, Hugin Online, Newslink, PIMS, PR Line, PR Newswire and Waymaker.

Ken Rushton, Director of Listing at the FSA, said:

I am pleased that there was so much interest from firms wishing to be considered for approval as PIP services. The whole point of our proposals was that competition should bring real benefits for listed companies, especially in terms of technological improvement and transparent costs. The other key benefit is that listed companies will be able to choose one provider for all their regulatory and investor relations information.

PIP services will be able to compete for the business of listed companies on many grounds, such as who is the fastest, who offers the most secure and easy to use system, who has the best technology or who offers the best all round service for PR as well as regulatory information. We will now assess the final candidates against our strict criteria."

FSA requirements are designed to ensure that the provision of regulatory announcements, such as mergers, financial results or directors dealings, to the market will remain of a high standard. The FSA is setting out the detailed service standards to which all prospective PIP services will have to adhere. All PIP services will be externally audited to ensure they meet these rigorous standards, both when they apply and annually on an ongoing basis.

These standards include:

• A high level of security, including controls to ensure regulatory information is processed securely and is not misused;
• PIP services being able to receive regulatory information 24 hours a day, 7 days a week and to release it between 07.00 and 18.30 UK time, on any business day;
• That 95% of regulatory information received electronically must be released within five minutes of receipt, unless embargoed;
• PIP services including in their application for approval, details of its connections with secondary information providers (SIPs);
• Transparent charges, clearly stated, so that they can be easily compared with competing PIP services;
• Recovery provisions, which are sufficient to ensure that there is minimum disruption to the continuous operation of a PIP service.

The FSA will now begin processing PIP service applications. All prospective PIP services will have to submit themselves to an external audit to ensure they meet all of the FSA minimum standards. The FSA expects to publish a list of approved PIP services in January 2002 and the new competitive system should be switched on in February 2002. This timetable is dependent on the ability of PIP services to pass the audit and to negotiate and put in place the appropriate arrangements with SIPs.

Competing PIP services will disseminate regulatory news to secondary providers or SIPs. Those SIPs who have indicated to us that they would provide aggregated regulatory information currently are AFX News, Bloomberg, Hemscott.net, the London Stock Exchange (through their website), Reuters and Thomson Financial. These secondary providers intend to collate all regulatory news from the PIP services and make the complete range of announcements available on their systems. The FSA believes that market forces will ensure that a real-time regulatory information source will be freely available, or at low cost, for the private investor. In the unlikely event that this does not happen, the FSA will provide regulatory information on its own website.

Notes for editors

1. The FSA has today published a Policy Statement: Proposed changes to the UK mechanism for disseminating regulatory information by listed companies. It is available on the FSA website at: http://www.fsa.gov.uk/pubs/policy/ps92. This was in response to FSA Consultation Paper 92, published on 2 May 2001, which proposed opening company announcements up to competition.

2. The FSA took over the role of UK Listing Authority from the London Stock Exchange on 1 May 2000. When the transfer took place, HM Treasury asked the FSA to undertake a review of the arrangements for the dissemination of price sensitive information by listed companies and to consider alternative methods of dissemination.

3. Currently the FSAs UK Listing Rules require all listed companies to issue their regulatory announcements by submitting them to the Companies Announcements Office of the London Stock Exchange, which then publishes the announcements through the Regulatory News Service (RNS). The RNS is currently the sole primary information provider in the UK; it is owned and operated by the London Stock Exchange.

4. The FSA established the Information Dissemination Advisory Group to provide technical advice in the drafting of the Paper. The Group included representatives of listed companies, the private investor community, institutional investors, advisers (investment banks, corporate stockbrokers, accountants and lawyers), the London Stock Exchange, potential PIP services, potential secondary information providers and investor relations organisations.

5. The FSA is the principal regulator of the UK financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; the protection of consumers; and fighting financial crime.

6. The FSA aims to maintain efficient, orderly and clean financial markets and help retail consumers achieve a fair deal.