Jonathan Schwartz is writing about Regulation FD, which governs the release of material information by companies in the United States (and, in Europe at least, the rules are pretty similar). He points out, (with Sun General Counsel, Mike Dillon talking the same point up yesterday) that for most individuals, the internet is far more accessible than an audio-conference or press release. The problem is the notion of simultaneity.
It's absolutely true that if I, as an individual, am considering investing in Sun or any other company, subscribing to company blogs would be a great way to understand the business. As long as I know which of the 4000 or so blogs at Sun I should concentrate on (and I realise that Eve and her fellow identity experts can ensure that I know with complete certainty which they are), presumably it would be a great way for me to notice material statements.
With Atom or RSS, I'd be pretty sure of getting that information within a minute… or at least minutes of the announcement. Depending on latency.
Within a minute? Pretty sure? Depending on latency? Hang on!
That might be fine for individual investors. But what about professional investors? If a professional investor in a mutual fund, a hedge fund or proprietary trader on Wall Street or in the City was faced with the mere possibility that they will probably get the information at probably the same time as their competitors…
Well. Ummm. There might be a few problems with that.
The thing about the "anachronistic press release" is that it can get information to thousands of media outlets, professional investment houses and investment infomediaries absolutely simultaneously. And I mean simultaneous… which is to say, within a tick or so of an atomic clock.
So, if a trader (or her algorithm) is sitting next to a terminal watching material news flash by, she can be totally confident that the only difference between her and her competitor is the time it takes to act on the news. All market participants get the news at exactly the same time.
In the interests of full disclosure, I should mention that we are part owned by Business Wire, who run the proprietary NX network that drives nearly half the press releases that contain material news in the United States and a big chunk of the rest around the world. They are great people, who take their role in the information supply chain very seriously, and run a bunch of smart technology that ensures that simultaneous disclosures really work.
I believe that in a world that is increasingly transmitting material information in computer readable form, especially XBRL, the need for true simultaneity is only increasing. So I, for one, just don't see how the rules can change to allow what Jonathan is asking. Not that it isn't an admirable goal. Just that the internet can't deliver on it just yet. Thoughts? john DOT turner AT corefiling DOT com
[Updated] Tim Bray weighs in.