View from City Road: Exchange should publish and be damned

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The Independent Online
The new Stock Exchange guidelines on price-sensitive information are mostly plain common sense. Unfortunately, that does not mean they will be much help.

The exchange's listing rules say price-sensitive information must be disclosed to the market as a whole. The guidelines repeat that, with much detail. But there is little in them that a good director, City adviser, analyst or fund manager could not have deduced just from thinking about it. They are, in fact, no more than a description of best practice.

The problem the guidelines do not properly address is that companies and City firms have increasingly had to turn to lawyers for advice on how freely they may talk to each other. This was nothing new for the US firms that arrived in London in the mid-1980s, bringing with them immensely detailed rulebooks on staff behaviour, drawn up in New York by lawyers trained to fend off the Securities and Exchange Commission.

But for many others, the new insider dealing legislation this year has put the legal risks into sharp relief. No analyst or company director wants to provide a test case for Southwark Crown Court. The guidelines will not reverse the trend to lawyer-dominated relationships.

Could the listing rules themselves be made clearer? To cover every possibility would be nightmarishly complicated. A better answer would be to stick to the rulebook as it is, but build up a list of practical examples that can be used as benchmarks. Companies and their advisers could use these to make decisions on how to handle their relations with the City.

At the moment, public censure by the exchange is extremely rare, and most infringements are dealt with by a private slap over the wrist. The exchange says this is because it is usually hard to find solid enough evidence to justify public criticism, especially as companies that feel wronged can appeal, up to judicial review.

If the exchange abandoned private tickings off and was brave enough to publish every time, others could learn by example. And where the line is overstepped and cases do come to court, perhaps judges would take into account the precedents published by the exchange.