December 13, 2011
If the SEC denies NASDAQ's rule proposal after having already approved the NYSE's rule, the competitive landscape for investor relations services in the U.S. will be further stacked in favor of the NYSE and its exclusive partners, including Business Wire.
Currently, NYSE's favored service providers dominate the IR services industry. For example, of the companies in the NASDAQ-100 index, only 10 used NASDAQ's PR wire service to distribute their most recent earnings news release. Those companies were: Cerner Corporation (Nasdaq:CERN) DENTSPLY International Inc. (Nasdaq:XRAY) The Fastenal Company of Winona, MN (Nasdaq:FAST) Intuitive Surgical, Inc. (Nasdaq:ISRG) Maxim Integrated Products, Inc. (Nasdaq:MXIM) Micron Technology, Inc., (Nasdaq:MU) O'Reilly Automotive, Inc. (Nasdaq:ORLY) Urban Outfitters, Inc. (Nasdaq:URBN) Warner Chilcott plc (Nasdaq:WCRX) and, Whole Foods Market, Inc. (Nasdaq:WFM). The remaining companies overwhelmingly used Business Wire or PR Newswire, which now would have you believe that NASDAQ's presence in the IR services industry isn't fair to them.
A competitive market for IR services is essential to investors and issuers benefiting from better services and technologies. As an independent consultant in the IR services industry, I believe that NASDAQ's presence in the market has been good for competition in this highly concentrated industry. For example, to make its GlobeNewswire service more competitive with the big wire service duopoly, NASDAQ has invested in innovations that level the information access playing field between retail investors who rely on the web, and professional investors who have direct wholesale access to PR wire feeds. Customers of NASDAQ's GlobeNewswire are able to simultaneously post new information to their websites, on EDGAR and through GlobeNewswire from a single interface. This ensures that when a company announces material information, all investors have simultaneous access to it. This is not the case when companies use other service providers professional investors get earlier access to news than retail investors who rely on free web sources. Without a competitive market, such innovations from NASDAQ and many smaller vendors would be much less likely in future.
While it would be best for competition if stock exchanges did not subsidize or own investor relations services vendors, the fact is that competition in the industry will be harmed if the SEC disapproves NASDAQ's rule after already having approved a similar one from the NYSE.