ASIC is right to maintain the rage against inappropriate disclosure but heaping more constraints on analysts comes at a potential cost

John Robertson

PortfolioDirect

ASIC is right to maintain the rage against inappropriate disclosure but heaping more constraints on analysts comes at a potential cost. (See Report 393, Handling of confidential information: Briefings and unannounced corporate transactions, May 2014 for ASIC's views.) Market efficiency is fostered by analysts fearlessly expressing opinions. Out of consensus opinions should be welcomed. They can arise by methodically assembling a mosaic of individually non-material pieces of information and conducting interviews to confirm analytical conclusions. The internal and external regulatory surveillance faced by analysts could become so intimidating that they fear drifting too far away from the herd. Tracking the consensus becomes the easiest way to earn a living. Under some circumstances, this could prove as deleterious to market efficiency as insider trading. Who is measuring that cost?


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John Robertson is Chief Investment Strategist for PortfolioDirect a provider of resource sector investment stock ratings and portfolio strategies for mining and oil and gas investors. He has worked as a policy economist, corporate business...

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