The City watchdog in conjunction with the London Stock Exchange is preparing a consultation paper on the matter according to today’s Financial Times.
Currently, the Regulatory News Service (RNS) is the only service to publish company statements and results announcements. However, two US companies, PR Newswire and Business Wire, are poised to enter the market. All services plan to charge companies to broadcast their information.
This latest FSA proposal has been met with criticism from companies and investors who are concerned the fee could discriminate against fast-growing enterprises that need to make frequent announcements. Some have even suggested the charges could be a dangerous disincentive to full disclosure.
Earlier in the week, the FSA proposal to impose fines on companies that breach isting rules was poorly received by the City which accused the watchdog of introducing a system of fines for petty misdemeanours.
In response to criticism of it latest proposal the FSA said it planned to introduce a tougher system of compliance. In March it will update guidance notes on the disclosure of price-sensitive information, clarifying definitions of price sensitivity and explaining the new fining system.
Simon Wilkinson, head of market information at the LSE, told the FT: ‘A fee system would ideally link costs to corporate activity. If someone only puts out interim and full-year results announcements, it will be reasonably inexpensive.’
Under the proposal, companies would have the choice of paying a flat fee or being charged per word.
The FSA has also suggested the option of offering its own news service, as a monopoly. However it would prefer competition to come from other newswires with the FSA option included only as a basis for cost comparisons.
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