February 22, 108
The proposed rule changes would seem to make information about OTC ADRs more readily available to US investors. But investors will need a way to know when companies post information on their websites or to a regulatory database, especially if there is a difference in timing between the availability of non-English and English information.
This is where it would be most useful if foreign issuers providing English translations of the required documents on their websites or regulatory databases were required to notify interested investors electronically when they have published those documents.
This could be done via free email alerts and RSS feeds that US investors can subscribe to by visiting a company's website. In the case of RSS feeds, information in them could be syndicated to websites in the U.S., such as the ADR portals of BNY and JPMorgan, at no cost to the issuer or investors.
I believe that all Swiss companies are required by regulators there to offer email alert facilities on their websites, so there is precedent for this kind of requirement. I don't believe there is an RSS requirement anywhere yet. But setting up an RSS feed can be done at no cost to the issuer if they use free software, or even if they use a free blog, as Google's Investor Relations department has done with its "What's new site feed" which is based on a free Blogger site.
Email obviously also can be free, although some kind of automated email facility likely would be preferable and this would likely incur a modest expense to issuers. My own experience is that about 70% of large companies internationally already have an email subscription facility on their websites for investor information.
In terms of allowing foreign companies to use a foreign regulatory database to meet the requirements, this should only be an option if the entire website on which the documents are posted is in English. Again, investors should be able to receive notifications via email or RSS from the company when disclosures are filed on the regulatory storage mechanism. These emails or RSS items should contain hypertext links directly to the documents, not to the regulatory database's homepage or general search page.
Unfortunately, regulatory databases in some countries are difficult to use and have been implemented using different approaches and technologies, some of which make it impossible to link directly to a company's disclosure documents. Navigating these sites also can be difficult because some lack good searching or filtering facilities while others have registration or CAPTCHA requirements. If a regulatory database is relied upon, then it must be free of charge and not require people to register.
When an ADR is not sponsored by the issuer, the US depositary should be responsible for providing the required information in English on the depositary's website if the company itself does not already provide the information on its own website or a regulatory database. A notification system via email or RSS should also be provided by the depositary for unsponsored ADRs if the company itself does not offer one or both of these.
Finally, there is not enough trading information publicly available about OTC ADRs, such as volume data. How will these issuers know what their trading volume is if it is not readily available on sites such as bnyadr.com or adr.com? More to the point, investors cannot judge a security's liquidity without this volume data. Whatever the SEC can do to encourage greater transparency of trading and pricing information in OTC markets would be most valuable.
Thank you for the opportunity to comment.