Indian Companies should announce market sensitive information only off-session.
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Listed Indian companies are allowed to disclose market sensitive information during market hours. This practice stands in sharp contrast to market disclosure norms in the developed markets like USA etc.
The market sensitive information may include, inter alia, financial results, production / sales data, subscriber data, Mergers & Acquisitions information etc.
The disclosure of market sensitive information during market hours causes undue volatility in the asset prices as some Investors with resources to utilize machine learning or a large number of headcounts have a temporal advantage, resulting in large volumes while others may not even know that a particular company has announced market sensitive information. This is especially pertinent since the companies can disclose the information at any point during the trading session.
Further, there is an increased likelihood of inappropriate Investment related decisions being taken by market participants, as quite likely the time available to analyse the information is not sufficient.
While it is quite possible that delayed release of information may result in an increased propensity for insider trading, this can be addressed by SEBI through better monitoring / surveillance.
Nonetheless, as mentioned above, developed markets do not permit release of market sensitive information during market hours. With India aiming to graduate to a developed market status, this could be one of the important ingredients towards that progress, thus, furthering the aim of transparency and accountability.
Hence, Securities and Exchange Board of India (SEBI) / Ministry of Finance, Government of India should mandate the companies listed on Indian Stock Exchanges to release market sensitive information only and only during off-session hours.
Professional organisations such as Indian Association of Investment Professionals (IAIP) / India chapter of CFA Institute and The Institute of Chartered Accountants of India (ICAI), which is also a statutory body, can and must represent the above to SEBI / Ministry of Finance, Government of India.
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