Mark Hynes - thoughts on corporate disclosure

Opinions on changing rules, changing best practices, and their effect on investor relations officers.

Wednesday, November 05, 2008

Now for the start of the regulators response…

Each month I dig around to find out the latest moves in regulation and best practice in transparency and IR. I put them into a summary. You can the latest – and the archive – here.

This month's trawling showed some interesting trends.

First the whole fair value debate. The means by which financial institutions assess the value of their assets – especially illiquid ones – has been the subject of a spat between the bankers and investors with regulators in the firing line. IASB and FASB together proposed changes, in part aimed at bringing together the approach of IFRS and US GAAP. The EU weighed in with its ideas, as did the SEC. (sorry for the alphabet soup of initials).

However with the users of reporting making their views plain, the issue looks like it has now been given more careful, lengthy consideration, with the IASB’s consultation, and the SEC holding its workshop. Is this purely an arcane debate for accountants? No, it speaks directly to heart of how financial institutions approach transparency, and communicate the value of their businesses. Watch this space, change is potentially coming.

In another favourite of this blog, we were pleased to see the FSA’s response on CFD disclosures. 2 notes of caution: we should watch how the exclusions for market makers work in practice. And second, I cannot see how it should take till September 1st 2009 to implement. Regulators can move a lot faster when they have a mind to…

And on the same theme, the report by the AMF in Paris on derivatives disclosure (which hints at a similar outcome to the UK decision), together with other markets such as Australia, suggests that this will become the norm globally? And a commercial lawyer in the FT noted that his phone is buzzing with alternative investors seeking advice on how legally to achieve the same result. Mind you, hedge fund investors in VW may be thinking twice now…

Meanwhile in this election week – go Obama! – US regulators launched a couple of unsung changes that will have a substantial impact. FINRA now requires reporting of foreign DR’s traded OTC. Does this impact the recent move to OTC from exchange listing?

And companies with US disclosure obligations should take note of an important speech by John White at the SEC, on how the CD&A reporting of exec comp needs to change in light of the new emergency TARP regulations.

Plenty more where that came from I suspect!


Post a Comment

<< Home