ASX concerns over media power
A LARGE number of ASX-listed companies believe the media has too much influence on markets, and have formally lodged their concerns with the market operator.
Fears that market rules have given the media incentive to publish speculative information and conduct "fishing expeditions" have been a recurring theme of the review being run by the ASX into its "continuous disclosure" rules.
The revelations from the ASX's chief compliance officer, Kevin Lewis, come after a week where the media was criticised for its role in a hoax against Whitehaven Coal, which was briefly reported as fact by several publications.
Mr Lewis said the continuous disclosure review was only halfway through its consultation phase, but a clear theme had already emerged. "A major issue that has been raised by many listed companies in that consultation is the impact of the media [both conventional and social] on markets," he said.
"There is a real concern among listed companies that because ASX requires them to respond to credible media articles that could impact on their market price, this is creating an incentive for journalists and others to conduct fishing expeditions and to publish speculative information with a view to flushing out the correct information from the company."
The principle of continuous disclosure deems that a company must disclose to the market any information that could affect its share price as soon as the information comes to hand. The system sometimes sees companies file announcements to the ASX disclosure page that respond to suggestions made in the media.
"There is also a concern that people are misusing media connections and leaking information deliberately to embarrass companies into making disclosures,"' Mr Lewis said.
The ASX released a draft of new continuous disclosure provisions in October, which Mr Lewis described at the time as being the "single most important" guidance note revision at the exchange for several years.
Among the proposed changes, the ASX has clarified that "immediate" disclosure of market-sensitive information does not mean it must be communicated to the ASX "instantaneously", but rather "promptly and without delay".
Mr Lewis was one of several commentators to question the media's performance in the Whitehaven hoax, which led to more than $300 million being temporarily wiped off the value of the firm after a hoax press release claimed it had lost a crucial $1.2 billion loan. The bogus press release was reported as fact by some media, but had been concocted by an environmental campaigner.
Mr Lewis said the incident highlighted an issue that online media in particular needed to address. "They may be trying to get information out too quickly without subjecting it to the same editorial oversight and verification processes as their print cousins," he said. "A case can be made that the online media should be winding back its timing expectations for the publication of online articles and making sure that they are subject to proper editorial oversight and verification processes."