Mind your Tweets! Hong Kong regulator takes a dim view of Twitter use for providing inside info
Hong Kong has long been regarded as one of the world’s largest and most important financial centers, and indeed today it has become the technology-orientated gateway for the West’s institutional giants and prominent retail firms as a well organized, sophisticated center for conducting electronic trading across all sectors for the Asia Pacific region. Back in […]
Hong Kong has long been regarded as one of the world’s largest and most important financial centers, and indeed today it has become the technology-orientated gateway for the West’s institutional giants and prominent retail firms as a well organized, sophisticated center for conducting electronic trading across all sectors for the Asia Pacific region.
Back in the days of the British lease, perhaps the colonial parlance may have been ‘mind your P’s and Q’s’, however in today’s social media-savvy Far East, it is more a case of minding your Tweets.
The Hong Kong Securities and Futures Commission (SFC) has described several instances in which the regulatory authority alludes to the need to improve the quality of disclosure, and in its corporate regulation newsletter has urged companies to stick to the official electronic publication system which is authorized by the Hong Kong Stock Exchange with regard to reporting material events.
This has come about as a result of the SFC’s concern over reliance on social media channels such as Twitter to analyze events, news risks, and disclosure which may be considered outside of securities laws.
According to Hong Kong law, inside information which is classified as information that is not regarded as widely known but could materially impact the price of company stock, or other asset classes must be disclosed in a manner that provides for equal, timely and effective access by the public.
On this basis, the SFC considers disclosures to be compliant if they are broadcas via the electronic publication system operated by the Hong Kong Stock Exchange, which is the HKExnews site.
By using alternative means such as social media or individual company websites, the regulator considers that entities could be providing advantages to certain investors.
The statement on the matter by the SFC is as follows:
“A company using other means to communicate inside information to the public may run the risk of uneven disclosure. There is less certainty that alternative methods allow every investor to have equal and effective access to the same information at the same time. A company may thereby create unfair advantages for some market participants and potentially prejudice the interests of other investors.”
One particular example cited by the SFC is an energy exploration company which published a press release on its own website reporting that it had made a breakthrough at an exploration site, which resulted in a 50% surge in its share price even though the event was not reported in mainstream media.
The SFC is therefore looking to provide a standard channel for reporting all events and therefore is going one step beyond the traditional ‘insider trading’ laws which are currently accepted internationally.
Currently the dissuasion from using and relying on social media and individual websites is exactly that – a dissuasion – however it could be the precursor toward legislation that would put all inside information onto a central, regulated source.
Photograph: Wikipedia user –Wpcpey