CESR consultation on Transparency Directive due date January 28 th 2005

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1 Business Wire Europe Rue Abbé Cuypers 3 B-1040 Brussels, Belgium Tel rudi.deceuster@scarlet.be CESR consultation on Transparency Directive due date January 28 th 2005 Please find below Business Wire s replies and comments on CESR s advice on possible implementing measures of the Transparency Directive Consultation Paper (October 2004). 1. Introductory Remarks: about Business Wire Business Wire was founded in 1961 and has developed over the last four decades into a global leader in corporate disclosure. Business Wire s integral role in providing financial news to the market place and to the retail investors has long been recognized by the US Securities and Exchange Commission, by Nasdaq and by the NYSE, by the U.K. s Financial Services Authority, as well as by the world s leading financial news services: Reuters, Dow Jones, and Bloomberg. Business Wire has 4 offices in Europe (Brussels, Frankfurt, London and Stockholm), as well as 24 offices in the USA, and offices in Tokyo and Sydney. Business Wire disseminates some full-text news releases every day to the media, the Internet, online services and databases, as well as to the global investment community in 150 countries, in 45 languages. The company was furthermore a pioneer in offering Internet distribution and storage, as well as in offering users the smart (multimedia) news release. Business Wire is the only commercial news service to have full-text carriage provisions with all of the world s largest news organizations: afp, AP, Reuters, Dow Jones and Bloomberg. In Europe, the company has established distribution agreements with news agencies in virtually all MS (Member States). 2. Replies to questions: Question 1: Minimum Standards for dissemination We agree with the minimum standards for dissemination, as defined by CESR. As regards the recommendation to use electronic dissemination methods, and to avoid fragmentation of information streams, we would like to plead in favour of discontinuing existing practices according to which issuers are required to give advance notice of 1

2 announcements to certain parties in MS s, as this will compromise the goal for fast and simultaneous access to all market participants. Moreover, we strongly support the recommendation not to charge investors with specific costs for receiving regulated information. Question 2: standards for dissemination by issuers In principle, next to operators (also referred to as professional information providers), issuers should be allowed to disseminate their regulatory information themselves, on the condition however that they meet the same standards as those required from professional information providers. Business Wire has repeatedly pointed out that full and fair disclosure can best be achieved by a mix of various media, like news agencies, web sites, newspapers, or databases, whereby all these media become complementary elements in the disclosure process. Issuers should therefore use a similar dissemination process when forwarding their own announcements. Moreover, in as far as operators should be required to submit themselves to an authorization process, the same authorization process should become mandatory for those issuers who want to organize their dissemination process themselves. Question 3: should an issuer be able to satisfy all of the TOD requirements to disclose regulated information by sending said information only to an operator? We fully agree. Operators should be able to present issuers with a one-stop-shop solution whereby the latter fully comply with their disclosure obligations by using the services of one single operator, also called professional information provider. Question 4: do you agree with the structures set out in Figure 1, representing a twolevel dissemination process? We fully agree with the structures as set out in the document. A similar dissemination module has been in use for 3 years now on the UK financial markets, and has proved to be entirely efficient and adequate. We strongly recommend that such a module should be used throughout the European Union. We would like to recommend however that, whenever competing operators (or professional information providers) charge a fee to the media, these fees should merely reflect technical and/or communications costs. Question 5: should operators be subject to approval and ongoing monitoring by competent authorities, or not? We agree that operators should be subject to approval by competent authorities, and that after approval has been granted, the competent authorities should be allowed to see to it 2

3 that operators continue to meet high standards, as scientific progress makes new technologies available. However, we plead in favour of an approval system whereby a European passport would be created, allowing operators who have been granted approval in one Member State should not be forced to seek anew approval in another MS, should they decide to extend their disclosure process there as well. Question 6: do you agree with the proposed minimum standards to be satisfied by operators? We agree with the minimum standards as proposed by CESR. They fully correspond to Business Wire s current operational standards. We do have reserves however as regards the continuing obligation to treat incoming fax or hard copy without delay. Not only does incoming hard copy and fax cause a security risk (identifying the source) which is cause for delay in itself, but also the manual treatment of such documents causes further delays, as well as additional risks for errors even though Business Wire has established sophisticated safety procedures which will reduce said risks to the bare minimum. We therefore think that issuers should be discouraged to use such obsolete communications techniques, rather than being encouraged by ensuring them a completely equal treatment for such copy. Question 7: should issuers be required to use the services of an operator for the dissemination of regulated information? The logics of a competitive system dictate that issuers should be free not to use the services of an operator for disseminating their regulatory information, and assume that obligation by themselves. According to the same logic, however, issuers making use of this option should be subjected to the same minimum standards as operators, and moreover, should be subjected to the approval procedure that operators will have to undergo. Question 8: What are your views concerning the role of competent authorities in disseminating regulated information as operators? We disagree with CESR s position that competent authorities or stock exchanges should be allowed to provide operator services, for the simple reason that this would create a conflict of interest, in that competent authorities or stock exchanges thus may become judge and party in certain MS s. Moreover, experience proves that a competent authority (or an affiliate thereof) acting as an operator will inevitably distort the competitive situation on the market by the fact that 3

4 issuers will be inclined to prefer using the services of their regulated market, rather than using the services of a competitor to said competent authority. Question 9: do you consider it necessary to attempt to address the risk that regulated information may not reach every actual and potential investor throughout the EU? Question 10: which of the options presented would, in your view, minimize this risk? Technically speaking, it is no longer a problem to make regulated information available to every actual and potential investor throughout the EU. The question is whether, in the case of retail investors, one can reasonably expect individuals to be monitoring their screens or news media on a 24/7 basis, while on the outlook for regulator information that may be of interest to them. This being said, Business Wire has since along time made all of the regulated information that is being distributed through our channels available, free of charge, on our web site While that is still a pull technology, Business Wire makes regulated information available via its web site by a push technology to selected audiences like journalists, financial analysts etc. - free of charge. In a way, Business Wire has therefore created a CSM (Central Storage Mechanism) avant la lettre, and without charging either issuers nor investors additionally for such a service. Lastly: the distribution module of professional information providers like Business Wire, using a media mix of online media, news agencies, newspapers, web sites and databases, will assure a European-wide distribution even to individual investors, on a 24/7 basis. Question 11: Do you consider there to be other methods of dissemination that would satisfy the minimum standards of dissemination? We can only think of electronic distribution of regulatory information via a two-level dissemination process as the appropriate solution in order to meet the criteria as set out by the Transparency Directive. Operators (or primary information providers) ensuring complete, immediate and broad electronic dissemination to news agencies, printed an online media, web sites and databases (as well as to competent authorities and to a storage mechanism) are the only complete and safe solution for achieving this objective. Any other method so far has shown to be less efficient, and also in most cases will fail to reach all target audiences as specified in the Directive. 4

5 Question 12: draft level advice: do you agree? We agree with the draft level advice, except for the remarks and reserves as formulated in the preceding paragraphs. Additional comments and recommendations from Business Wire A. Central Storage Mechanism (CSM) Business Wire applauds the proposal to set up a central storage mechanism where all regulatory information should be filed for further retrieval and access. As stated above, however, we oppose the idea of competent authorities or market regulators being empowered to set up such a central storage mechanism, since this would inevitably distort the competitive climate: issuers would be inclined to use the services of those official storage mechanisms, rather than use similar options offered by operators or commercial entities. In the case of Business Wire, our company has been a pioneer in offering web posting and storage for regulatory information since the mid-nineties of the previous century, free of charge to issuers using the services of Business Wire. At this point, the Business Wire web site already posts corporate information in six European languages: French, English, German, Spanish, Italian and Dutch. Specific categories of users can apply for receiving this information via a push technology, whereby they will automatically receive information from categories that they can define themselves free of charge. Similarly, business corporations can use this BW web site for filing their own releases, and making them accessible free of charge to outsiders. In the USA, BW is one of the largest filers of regulatory documents on the EDGAR system. Next to its own web site, Business Wire posts regulatory information on web sites like MSN, Yahoo, MarketWatch, and AOL, all of which are regularly accessed by retail investors. In all due modesty, we think that web sites like the one that Business Wire has developed can perfectly serve as a basis for a European Central Storage Mechanism. 5

6 B. XBRL Business Wire is a strong advocate of the use of xbrl for presenting regulated information. Once introduced on a European or worldwide scale, this reporting method will considerably promote easy access to corporate financial information for users anywhere in the world. Here in Europe, it will also largely contribute to overcome the language barrier, in that it will make financial data readily available to any user, regardless of the language used by the issuer. Contrary to wide-spread opinion, xbrl can easily be adopted without costly or tedious procedures or long running-up times: countries like Spain, the Netherlands and Belgium have been able to adopt xbrl within a time-frame of barely six months. Business Wire has acquired considerable experience in developing xbrl and promoting the use thereof, and will continue to do so in the future. By way of example, BW was the first financial news provider to license Edgar Online s comprehensive xbrl fundamental financial data. Furthermore, Business Wire is currently developing an xbrl document creation tool that will soon enable issuers to create and validate xbrl instance documents. C. Languages As regards the use of languages for disseminating regulated information throughout the EU, whereby non-english speaking issuers are recommended to disseminate their original text release accompanied by an English translation, we would like to draw the attention to the potential contradiction between the delay required for producing translation, on the one hand, and the requirement for immediate and simultaneous dissemination, on the other. The solution of this problem lies either in recommending that issuers themselves should forward an English translation, together with their original text (which would also alleviate potential problems arising from translation mistakes), for dissemination, or else, to provide for a reasonable delay in producing an English translation (say: 8 hours), after which both the original text and the English text should be disseminated simultaneously. Failing to do so may force issuers to pay twice for dissemination: once for the original text, and a second time for the English translation. Moreover, this would create a twospeed dissemination process. 6

7 D. Global Reach One should bear in mind that a number of EU-listed companies, whose activities and shareholders may extend beyond the EU borders, may be well advised to enhance the distribution of their regulated information to a global scale. Operators like Business Wire, whose distribution networks extend over 150 countries worldwide, are even then in a position to offer the one-stop shop solution that CESR favours, and offer global dissemination, should this become necessary and/or advisable. While financial markets and investors increasingly work on a global scale, organizations like BW are capable of offering solutions that are beyond the reach of either local players or even competent authorities, should the latter be allowed to commercially compete with operators in this area. Conclusion Business Wire would like to conclude by congratulating CESR for the way in which this level two paper has been drafted, and for the detailed and professional approach that it reflects. We do hope that the Transparency Directive s obligations will be put to execution along the lines that have been set out here, and that our remarks and recommendations may be taken into account and be put to good use, when it comes to implementing the ruling of TOD in concrete measures, as well as in the national legislation of EU Member States. Brussels, January 24 th 2005 Contact: Business Wire Europe Rudi De Ceuster, Director Rue Abbé Cuypers 3 B-1040 Brussels, Belgium Tel Direct Mobile rudi.deceuster@scarlet.be 7

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1. Introductory Remarks as regards Business Wire

1. Introductory Remarks as regards Business Wire Business Wire Europe Rue Abbé Cuypers 3 B-1040 Brussels, Belgium Tel. 00 32 2741 24 55 e-mail rudi.deceuster@scarlet.be www.businesswire.com Brussels, May 24 th 2005 CESR April 2005 re-consultation paper