Understanding Social Media Regulation For Capital Markets Communications: A Global Perspective
October 24, 2016
FTI Consultings’s capital markets and digital experts provide an overview and analysis of the use of and regulation of social media for capital markets communication. We draw comparisons between global capital markets’ use of social media and how regulators have responded to this medium. It is a confusing space for many listed companies, but one which if ignored, can lead to reputational risk and missed opportunity; and one which if embraced, can enrich a company’s value and engagement with the investor community. Underpinning this, a strategic approach to social media communication will ensure both positive and negative news is managed and appropriate risk mitigation strategies are in place.
In the United States, the SEC has issued clear guidance for listed companies, acknowledging that companies’ reluctance to embrace social media may ultimately put investors at risk. The lack of clear guidance in other jurisdictions, such as the UK, may be the key reason why companies are hesitant to engage in investor relations and capital market communications via social media. In both Australia and Hong Kong there is some guidance, but it focuses on monitoring and reporting obligations for speculation and rumours, rather than proactive use to enrich investor communication and prevent corporate reputational risk.
Infographic: A strategic approach to social media communication for listed companies will ensure both positive and negative news is managed and appropriate risk mitigation strategies are in place. Click to view >
What Do Listed Businesses Need To Know Before Communicating On Social Media?
Companies should take note of their listing requirements and regulatory environment to inform a best practice approach, and also benchmark their communications to a global best practice model. This will mean they are leading the regulatory environment and protect and enhance their investor engagement.
FTI Consulting’s Top 5 Tips
Investors should be cautious about utilising social media for decisions and should seek verified audiences; companies should recognise this and put in place the appropriate protections and procedures to insulate investors and potential investors from market-manipulating information.
Companies should be aware and compliant with the regulations in their jurisdictions and seek advice from communication specialists if required, to establish an appropriate social media strategy and guidelines for engagement.
Leverage social listening and use data and insight to inform strategy and understand investor audience and requirements.
Know your audience and how to influence retail and institutional investors through various channels.
Companies should take advantage of social media for an opportunity to interact with the capital markets community. Social media provides a platform to collect and harness data, creating a valuable feedback tool.
In the coming week we will discuss how these regulations impact communications in the following markets: