The European Commission’s Stealth Decision on Transparency:

November 9, 2011
For publicly listed companies, transparency is not an option — it is an obligation.
by Neil Hershberg, Senior Vice President, Global Media

Neil HershbergThe European Commission said as much when it implemented its harmonized pan-European disclosure standards for the 27-member European Union in January 2007. The compliance guidelines were aptly titled:  the Transparency Obligations Directive ["TOD"].

Therefore, the European Commission’s puzzling proposal to make interim management statements and quarterly reports voluntary for all EU issuers is beyond baffling. And given the global market machinations attributable to the roiling European debt crisis, the timing of the Commission’s diffused disclosure requirements couldn’t be worse.

Perhaps most upsetting of all, the Commission’s decision to truncate its transparency criteria for all EU issuers was apparently arrived at in a stealth manner.

In the way of background, the European Commission held public consultations on its plans to “modernize” the four-year-old TOD in the spring of 2010.

A key focal point of the discussions was the desire by SMEs (small and medium-sized enterprises) for relief from “the administrative burden” associated with trading on regulated markets.

Large-cap companies quickly capitalized on the opportunity,  arguing that they too were overwhelmed by the statutory requirements and lobbied to be similarly exempt from quarterly financial filings.

Most market observers dismissed the outcry by large-cap companies as simply an attempt to latch on to a market reform movement that was gaining momentum. Few, however, believed that large-cap companies would be included in any revamped reporting requirements.

Some 16 months after the original consultation period, and without any further debate or notice of its intentions, the European Commission announced its surprise retrenchment proposal, abolishing the requirement that public companies publish quarterly financial information.

The Commission did the unthinkable, effectively waiving the need for all listed companies, regardless of size, to issue quarterly reports. Under the revised landscape, companies are only obligated to file half-year and annual results.

In retrospect, the Commission took the easy way out. Faced with the challenge of identifying qualifying SMEs, particularly with fluctuating market valuations, was too daunting a task. The Commission decided to take the path of least resistance: throw out the transparency thresholds for all issuers in the name of cost-efficiency.

The reality of the situation is that cost of regulatory compliance is extremely reasonable, especially when weighed against its capital market benefits. These include greater visibility and liquidity, less volatility, and higher trading volumes, all of which are likely to contribute to a lower cost of capital.

Services such as Business Wire offer flat rate annual packages that are very competitively priced, enabling issuers to effectively control costs, while ensuring broad, simultaneous distribution to the full range of market participants.

Under the Commission’s proposal, companies can still file quarterly reports and interim management statements at their own discretion. There is no longer a mandate for companies to do so. The investment community, and the financial markets, will be ill-served by the Commission’s short-sighted decision.

Ironically, many observers think that the majority of companies will continue to update the marketplace on a regular basis. Most companies recognize that to limit market communication to semi-annual updates simply doesn’t make sense. The value of an effective investor relations program that, by definition, includes regular updates on corporate developments, has been well documented by independent academic studies.

So while many market professionals anticipate minimal consequences from the Commission’s decision, it clearly sends the wrong message to the marketplace.

The global markets remain as fragile as ever, with investor confidence teetering as the world holds its breath waiting to see how the European debt crisis plays itself out.

A major lesson learned from the 2008 financial markets meltdown has unfortunately been quickly forgotten by some market regulators.

Information is the lifeblood of our financial markets. Stanching its flow, in the name of relieving the “administrative burden” on listed companies, is a tremendous disservice to the investment community, and needlessly substitutes risk for reassurance.

With the European Union seemingly on the brink, the European Commission’s proposal to dial back on disclosure sets a dangerous precedent that desperately needs to be reversed.


Business Wire International: France

March 30, 2009

Today we continue our series of posts from our colleagues outside the US, with a look at Business Wire’s experiences in France from Agnes Deleuse, Marketing Specialist.

Challenge, challenge, challenge!

The youngest of all Business Wire European offices, Paris opened its doors in the fall of 2005. Business Wire Paris was thus fully operational when the TOD (Transparency Obligations Directive) was enforced in January 2007. Getting the authorization by the French Market Authority to distribute disclosure information was certainly a decisive factor to attract global companies listed on the CAC40.

Representing an important part of our business, disclosure news distributionwas a good way for companies using our services to discover Business Wire and the many advantages of a newswire service. These companies started to realize they could introduce the wire in their marketing and communications strategy, for Business Wire has so much to offer, from global distribution to industry specific media coverage, multimedia posting, search engine optimization and XBRL formatting.

But too many French companies are still unfamiliar with the wire. There is a long educational process to implement here because French people are sometimes too conservative. Changing their marketing and communications habits to use a wire can be considered a revolution.

However, in the economic turmoil the world is now facing, changing marketing behavior is going to be a necessity. There is therefore a new chance for the wire, and thus for Business Wire. Companies want to continue to communicate but are tied to cost reduction, while print media is on a downward slope. Reaching international press agencies, online services, portals, journalists, investors and various trade communities is so easy with a wire service.

French companies are slowly incorporating this new media concept to cope with the economic environment. In France, we have noticed that our new clients are experimenting with the wire on a one-shot basis to start with. Some have already repeated the experience and we hope that they will continue using Business Wire in the long term. The online visibility and SEO tools are certainly enticing. Companies are adapting to a new situation, and so are we.

Thus, challenge is our daily sport.

But there is a corporate challenge as well: International offices have to face many differences from their counterparts in the United States. Speaking a foreign language is a major one, adapting existing tools from the US market to European customers is another. But so far, so good. European offices are very young and still growing.

But should there be no challenge, there would be no fun. We have to be constantly inventive and creative to go on the lookout for new clients, to find new ways and new words to promote Business Wire, its products and services. The high existing potential is very stimulating and the Business Wire Paris team* is up front to face the challenge.

Agnes Deleuse
Marketing Specialist
Business Wire France

*Business Wire Paris office team (12): a regional manager, a sales manager, two account executives, one CSR, one MRT, one marketing specialist, and a newsroom of five persons.


Business Wire International: The View from Europe

March 23, 2009

This week, Business Wire takes a look at its worldwide operations, by getting the view from our colleagues outside the US about our challenges and successes in different markets.  We start with a history and overview of our growth in Europe from Dick Bromley, Regional Vice President, Europe.


It was always going to be a challenge; that was never up for debate. Sitting comfortably in a safe, secure job some 9 years ago, I had the things I always wanted: A nice car, a new flat and a good career. I was happy and content, and then the phone rang with the call that changed my life. “Hi Dick, it’s Gregg Castano. How do you fancy setting up Business Wire’s first International office?”

Dick Bromley, RVP Europe

Dick Bromley, RVP Europe

Three months later I was sitting in an office in London’s financial district having completed a week’s training in New York. My head was buzzing with all the information I had recently learned, and I was desperately trying to remember what all these funny acronyms meant. “ASCII”, “HTML”, and what exactly again was the difference between a NY metro and a NY state circuit? One thing was for certain — I had to be a quick learner!

It was slow at first, not least because at that time, Business Wire was not well known outside the United States. Our biggest competitor had been in operation here for a number of years and we had a huge amount of catch-up to do.  Gabi Richard (my boss at the time) and I threw ourselves into the daunting task of developing a brand and a presence in the UK. I vividly recall doing as many as eight meetings a day at the time, plus lunch and dinner functions as well as numerous interviews in between. It was relentless and incredibly hard work but we carried on knocking on doors and building new relationships. 

Part of the problem was that unlike in the US, many of our clients had simply not come across the wire before and needed convincing as to its benefits. Just as I was starting to wonder whether all this hard work was getting us somewhere, the phones started ringing. Business came slowly at first, and then the floodgates opened. Before long we had managed to win new business from some of the UK’s largest and most prestigious companies and had expanded our team to include more salespeople, a local newsroom and a media relations department.

In 2002 we became one of only five companies authorised to disseminate price sensitive news to the UK, and before long had racked up a significant market share. It was a good year for the office and we reveled in our status as “Business Wire’s fastest growing office ever.” New premises in London quickly followed and our client base increased at a rapid rate.

New offices opened shortly after in Frankfurt and Stockholm, each with their own unique challenges to overcome. Once again a “back-to-basics” and hardworking approach to business, coupled with a passion for customer service, quickly resulted in Business Wire firmly establishing itself as a local player in its own right. New and often exclusive agreements with many high profile European News agencies followed, including us adding the incredibly prestigious Agence France-Presse to our offering. Business Wire clients could now send their news directly through the World’s largest and arguably best-known newswire. A Paris office opened shortly afterwards, adopting the same winning formula as London, and to everyone’s delight, stormed ahead in winning new business at an incredible rate.

In 2007, with my responsibilities now including managing sales across Europe, we firmly cemented our position in the European disclosure market with the advent of the Transparency Obligations Directive (TOD). Created by the EU as a means of providing regional uniformity in disclosing price sensitive news, we drew upon our unique experience from around the globe to create a springboard to the investment community, unsurpassed by any other provider. Business Wire clients can now disclose news directly into eleven member states within the EU, more than any other newswire on the planet. Believe me when I tell you that coordinating a project of this size was by no means a small feat

Looking towards the future, Business Wire Europe stands poised to continue its growth across the continent and meet its client’s expectations with ease. Having access to unquestionably the most comprehensive network of news agencies across the region, we continue to exceed expectations and win new business from many new fronts. Our unique, “one size does not fit all”  approach to sales, truly phenomenal customer service and a desire to go one step better than the competition continues to win us support on many fronts. I’m looking forward to the challenges that lie ahead and continuing to build on our reputation.

Dick Bromley
Regional Vice President, Europe


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