FSA opens up company announcements to competition

Michael Foot, Managing Director of the FSA, said:

These proposals to open up the system to competition should benefit the UK equities markets by making information dissemination cheaper for the market as a whole. Listed companies should also benefit from a more transparent and fair pricing structure for their listing needs and from being able to choose the information provider that can offer them the best deal.

All types of investor will benefit from having instant access to all company announcements. We will ensure, under these plans, that private investors continue to have access to a single source of free or low cost full text regulatory announcements.

Under the FSAs proposals, listed companies would be able to publish their regulatory announcements, such as mergers, acquisitions, financial results or directors dealings, through a choice of FSA approved primary information providers (PIPs). These approved providers will then disseminate regulatory announcements to news vendors for publication.

To ensure that all investors have easy access to full, accurate and real time information, the FSA will ensure any approved PIPs will provide the following:

• A high level of security;
  
• A user-friendly input method
  
• Adequate access by end users to the regulatory information
  
• A transparent charging structure
  
• The ability to adjust to any future consolidation of markets; and
  
• The flexibility to embrace new technological advances rapidly.

Preliminary discussions have been held with a number of potential PIPs, including the London Stock Exchange, PR Newswire, Businesswire, Hugin Online and Ubiqus. Each approved provider will be able to compete freely with other providers for the custom of listed companies.

PIPs will disseminate regulatory news to secondary providers such as Reuters, Bloomberg, AFX News, Dow Jones and internet providers such as hemscott.net and iii. These secondary providers intend to collate all regulatory news from the PIPs and make the complete range of announcements available on their systems (as they currently do with RNS announcements) at no extra cost to their customers.

The FSA will monitor to ensure investors continue to receive an aggregated source of real time announcements and that this is made available free or at low cost to private investors. Should this not happen under commercial arrangements, the FSA will provide this information on its own website.

Notes for editors

1. The Consultation Paper Review of the UK Mechanism for Disseminating Regulatory Information by listed companies was published by the FSA today and can be accessed via the following link www.fsa.gov.uk.

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. 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, lawyers etc), the London Stock Exchange, potential primary information providers, potential secondary information providers and investor relations organisations.

5. The FSA estimates that the total cost of the proposed competitive model to the market as a whole is 3,192,000. This compares with the FSAs estimate of the total cost for RNS of 5,600,000 per annum. The overall cost to the market should therefore be reduced by moving to a competitive system. In addition, the FSA currently pays up to 1.5 million per annum to the London Stock Exchange towards the operating costs of RNS. Any cost savings to the FSA as a result of implementing the proposed new system will be passed on to listed companies through the UKLA listing fees being lower than they would have been had the present arrangements continued.

6. The FSA regulates the 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.

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