Howard Davies, chairman of the FSA, backed its decision to allow Marconi to suspend trading in ...
Howard Davies, chairman of the FSA, backed its decision to allow Marconi to suspend trading in its shares last week.
The move had attracted considerable criticism from UK investors and especially US investors who returned from their Independence Day vacation on to find the shares had halved in value.
Speaking at an Investor Relations Conference in London today, Davies reminded listed companies that they are obliged under the FSA's listing rules to make timely public disclosures of information that might have a substantial impact on their shares.
Davies conceded, however, that no amount of market-sensitive rules will prevent difficult cases emerging from time-to-time.
He reasoned that the suspension of shares in Marconi last Wednesday was an example of this. He explained that in the highly unusual circumstances which the company described, he believed the FSA was right to agree a suspension of trading when Marconi requested it.
Davies argued that making only one of the two projected announcements could have exposed investors to dealing without full information, while the company was not able to make the second announcement for some hours.
"Looking to the future, we are committed to a more fundamental review of the listing régime, as one of the terms under which the Treasury passed responsibility for listing from the Stock Exchange to the FSA last year," Davies added.
Moving on to a more fundamental area of reform, Davies outlined the FSA's proposals for introducing competition into the mechanism to be used by firms for making price-sensitive announcements to the market.
He said: "We aim to remove the monopoly of dissemination of regulatory information from the London Stock Exchange and to open the process to competition. I should emphasise that the Stock Exchange itself accepts the case for competition.
"... we are suggesting a new, two-stage model, drawn as much as anything from the Canadian experience, of 'pips' and 'sips'. The primary information providers (pips) would act as, if you like, wholesalers with the secondary providers, sips, as the retailers. We have received a number of strong expressions of interest in the pip rôle, and there is no shortage of candidates to be a sip.
"We shall want to look carefully at the full set of responses over the summer before we decide finally on the right way to reform the current system," he continued.
The full text of Davies' speech is available at www.fsa.gov.uk
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