RNS vs Twitter
According to reports Goldman Sachs is the latest US company to stop using a newswire to distribute its earnings. This decision has received some criticism, which we would tend to agree with – it seems hard to argue that using twitter in conjunction with a corporate website will really meet the requirements for widespread and timely distribution to as many people as possible. However, the issue of using new media for regulatory announcements got us thinking about the situation in UK markets and whether we could see similar developments here.
Of course, regulation is very different for UK and US listed companies. The SEC approved social media as a channel for reporting company news in 2013. In the UK information has to be disseminated via one of 7 FCA approved primary information providers (none of which are social media), though since 2014 companies can also use those approved by another EU member state (and in some cases an unapproved one too!).
The prospects of twitter becoming an approved primary information provider appear remote, so UK listed companies are unlikely to be able to follow the example of Goldman Sach’s any time soon. Of course this doesn’t mean that companies shouldn’t use social media in addition to traditional channels to ensure the widest possible dissemination of information.
Interestingly, despite the presence of 7 authorised providers, the UK really only has one significant player – the ubiquitous RNS with a market share of >70% according to its owner the LSE. RNS recently began charging users for access to its content (as well as charging companies for making announcements) and has its detractors – the help desk is very good but the software interface feels old and formatting long announcements can result in sleepless nights. Nevertheless, for whatever reason RNS has held off other competitors and largely maintained its market share since competition was introduced in the early years of the century.
To our minds, the benefits to consumers of having one single source for regulated information that can be easily accessed by all investors seem greater than the benefits competition has delivered thus far. Back in 2001 the FSA thought “competition should bring real benefits for listed companies, especially in terms of technological improvement and transparent costs.” It’s hard to see the evidence for this in practice. Perhaps RNS should be seen more as a utility and regulated as such?