Impulse Interview: Fake News and the Stock Markets
Katharina Rüdlinger and her team at SIX Exchange Regulation ensure that communications from companies listed on the Swiss stock exchange are clear, factual, and complete. The Head of Corporate Disclosure explains what ad hoc publicity means in the age of alternative facts and social media.
"Post-truth" is the Oxford Dictionaries Word of the Year 2016. Everyone is talking about alternative facts and fake news.
The phenomenon is not new. Since the invention of print media, there have also been newspaper hoaxes. But the viral character of social media gives fake news a faster spread and wider audience than ever before.
Do stock market authorities need to address fake news at all?
Yes, they do. In connection with ad hoc publicity, our regulations require listed companies – that is, the issuers – to provide the public with factual, clear, and complete information. Fake news can also play a role in market manipulation.
Let’s talk first about ad hoc publicity. What does that mean, exactly?
Issuers are basically obliged by law to publish potentially price-sensitive facts in a specific procedure as soon as they have knowledge of those facts. This applies to company-specific facts that, once published, could significantly affect the share price. The so-called ad hoc notice must be sent to all required recipients and appear on the issuer’s website simultaneously. As a rule, this should take place 90 minutes before the start of trading or after the close of trading. If this is not the case, we determine whether trading in the securities must be suspended. The principles of transparency and equal treatment are at stake here.
The words "potentially price-sensitive" and "significantly" imply some flexibility.
It’s true that the issuer has some room for interpretation. But this shouldn’t be taken too far, and it is quite possible that our interpretation will differ. It’s not just black or white: There are many shades of gray. Each individual case must be examined very carefully. To some extent, the size of the company can also play a role. For a small pharmaceuticals firm, the new approval of a drug often qualifies as potentially price-sensitive. For a large pharmaceuticals company, one new approval may not have the same effect. This is why we also maintain an advisory capacity and are open to questions. On the other hand, we also have to enforce the applicable laws, which isn’t always appreciated. Companies must recognize that a stock market listing involves relinquishing some of their freeImpulse dom in terms of communications, and rethinking some of their practices.