Business Wire CIO Steve Messick speaks out on why RSS feeds do not meet fair disclosure requirements

March 26, 2007

Business Wire’s Chief Information Officer, Steve Messick, weighs into the conversation with his insights on why a public company delivering news via RSS feed would not meet disclosure: 

“There has been quite a bit of blogging back and forth the last few months over Regulation FD’s (Fair Disclosure) intended purpose and what platform best serves the goals intended by the regulation for both the investing public and corporate issuer.

More specifically, Jonathan Schwartz, CEO of Sun Microsystems, and the Honorable Christopher Cox, Chairman of the SEC, have opened this topic up with an interesting and timely exchange of the issues and technology at hand. 

Business Wire, one of the oldest and most respected companies tasked with ensuring fair disclosure for thousands of companies both domestic and abroad would like to add our insight into this important issue. When Reg. FD was adopted in 2000, many corporations abhorred the legislation as heavy-handed and an unnecessary burden on CFOs and their staff.  However, Mr. Schwartz and Chairman Cox concur that this is important and needed legislation. 

As a technologist and CEO of one of the world’s largest computer and software providers, Mr. Schwartz is in a unique position to discuss the corporate viewpoint, and also how technology can best serve the goals of Regulation FD. 

As experts in the field of disclosure and material news dissemination, Business Wire is also uniquely positioned to lend its knowledge and technology expertise to the discussion.   As chief information officer for Business Wire, I have been involved in software development and data communications for thirty years. I have also been a strong proponent of open standards technology since its inception. 

I remember my excitement at purchasing the second NCR Tower off the assembly line in 1983, one of the first commercially available UNIX systems on the market.  We were using LINUX and JAVA for mission critical systems and applications at Business Wire early in their product cycle and we have been active participants in open standards development with International Press Telecommunications Council (IPTC) and Extensible Business Reporting Language committees (XBRL).

So who cares?

Business Wire’s clients care when they need to get their news out quickly, reliably and accurately in order to satisfy Reg. FD.  The financial media and analysts care, too, because they need assurances that the news is sent at precisely the same instant to each and every recipient.

Let’s get to the point:

The root of the discussion centers on using “new” Internet technology as a means for disclosing material news to meet Reg. FD guidelines. Based upon comments made in Mr. Schwartz’s blog, we think he is way off base.

The specific “technologies” under discussion are corporate blogs (hosted on company websites) and RSS or Atom feeds, which would be used in lieu of a simultaneous and broadly disseminated news release to the media and investment community.

RSS is an accepted standard of information dissemination and blogs are becoming an acceptable means for corporations to communicate with the public. However, we do not agree that these are acceptable technologies for fair and simultaneous disclosure of material, market-moving information.  

And here’s why:

RSS (standard configuration), is a poll and pull-based Internet service. The fundamental flaw in a poll/pull protocol is that it requires the recipient of the information to ask for service–to poll for the content. By default, you cannot insure that all of these “askers” are going to receive service from the corporate web server simultaneously.

In other words RSS/Atom is not a simultaneous news delivery process protocol. It could be considered near simultaneous, but if I am an investor competing with other investors, I surely do not want to be the last one to get my poll acknowledged by the corporate web server.  

Here is a clarifying example:

I go to the post office to get my mail and packages every day. I may get to the post office after a long line has formed. As a result, others get their mail and packages before me. It isn’t possible for me and my fellow neighbors to receive our mail and packages at the same time.

The post office functions like RSS does as a delivery mechanism. RSS poll/pull administration requires you, the receiver, to configure every corporate news site that you want access to. You must also set your reader poll times to receive the feed–hopefully as fast as your competitor and/or other traders.

To further the example:

Now, I have just been informed now that my mail is located at several hundred post offices and some open and some close everyday at different times and some don’t even know when they are open. One post office sends me a bunch of junk mail that I really didn’t want and it took me a long time to read through it. Then I received a check in error and I cashed the check now causing more errors. I didn’t know the post office made errors and they didn’t inform me of this one.

I am going to have a real heck of a time getting my mail now as I go from post office to post office hoping they are open, have no lines, and hoping they give me the correct mail.  

This could be a real scenario for the institutional and/or retail investor trying to poll multiple corporate sites that have announced that their earnings will be available at some pre-determined time. As eager investors salivate waiting on the content of the blog to post, one would hope the investor relations web server is beefed up, reliable, redundant, and doesn’t get saturated when possibly thousands of investors try to poll and pull their announcement blog over to their RSS reader.  

To more generally discuss the technology being used by RSS, let’s compare poll vs. push technology. Business Wire, and presently the entire global financial community, including the SEC, agree that the push protocol is better. It allows the recipient to receive corporate information simultaneously rather than having to “ask” for it from a myriad of corporate web servers. This is inherently more efficient than each and every investor on the planet having to keep watch and poll every corporation that they are monitoring.

Let’s boil it down further:

What is the industry standard Internet protocol for simultaneously pushing financial information to the investor community? There isn’t one! 

In 1999, Business Wire envisioned the Internet as the financial communications platform of the future. The problem was that no TCP-IP based delivery protocol could insure sub-second simultaneous delivery of content over the internet at that time in order to meet Reg. FD’s guidelines. To remedy this situation, in 2003, Business Wire created and launched the NX news protocol and delivery system, for which we were awarded a patent in June of 2006.  

NX is a push process protocol we designed specifically for Reg. FD disclosure. NX insures that each and every reader gets the news content and automatically requests a resend if there is a problem. The NX reader is a simple Internet appliance that can read and process thousands of financial disclosures with no administration or maintenance.

NX is based on the IPTC’s XML standard for news delivery: NewsML. NewsML manages content format independence, yet provides for powerful news management capabilities. To our knowledge, we are the only wire service that has tested our NX technology in sub-second disclosure distribution and can make the claim that we are simultaneous in our delivery. 

So what does all of this really mean to the average retail or institutional investor?

It means distribution is fair and simultaneous, but information processing is still cumbersome. Plain text-based news releases require humans to read them, analyze them and input the numbers into their own spreadsheets manually. That is all about to change pending the acceptance of new financial data formats–XBRL specifically. The hope for XBRL is to enable analysis and investment decision making in sub-second scenarios. XBRL and NX technology combined will allow for Reg. FD to take hold of its primary goal, which is to provide both retail and institutional investors with the ability to make fast and intelligent decisions from Internet-based online corporate news and financial announcements.”

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