Notice-and-Access Press Releases; An interview with Jason McGruder, VP Investor Relations at BGC Partners
On Feb 23, 2009 BGC Partners became one of the first widely known companies to utilize a ‘Notice-and-Access’ release for their quarterly earnings. This approach was based on the SEC’s guidance regarding using websites for disclosure under Reg. FD.Leading up to and following the announcement, a lot of online discussion took place about potential pitfalls. The day after the event, Dominic Jones of IR Web Report provided detailed commentary as to how the event unfolded.
As a follow up to this, I contacted Jason McGruder, VP Investor Relations at BGC Partners to find out why his company decided to utilize notice-and-access, how the process went and what the feedback had been from the market. Finally, I also asked what best practices Jason and his team could share so that other companies considering this approach could learn from their experience.
**Interview**
Why did you decide to use a Notice-and-Access model?
It was really all about expedience. In smaller companies like BGC Partners, earnings typically are completed the day of the announcement, so there is always a big time crunch. The challenge in putting your full release across the wire is that you need to have two versions of the document: one internal Word version and another that the newswire converts to text. This, then requires that you keep both versions in sync at all times.
As you approach the deadline; there are inevitability changes to the word version which then have to be coordinated with the newswire version. The problem is even bigger if the change relates to one of the many financial tables. One number moves and you have to update multiple documents, which increases the risk of errors and requires a lot of time, both internally and with the newswire to get it right.
Once we learned of the SEC’s new guidance and how notice-and-access could work, I immediately thought of how much simpler it would be to only handle one version of the document. As it turns out, using a notice and access model and only dealing with one version of the document, was a huge time saver.
It�s quite interesting that efficiency was the main reason, what about cost savings?
Cost savings is certainly an added bonus. On average, we were paying about $5,000 per earnings release. With a notice-and-access model, the cost dropped to under $500-$1,000. The $20,000 annual cost on earnings releases alone, is enough to fund an analyst day at a nice hotel each year, which is a far better investment in terms of investor relations.
Can you walk me through how the process worked?
About 6 weeks before our earnings, we did a test run with a notice-and-access release for an analyst day. (This test helped us see that we needed to put http:// before any URL. This ensures that the link works on any system, including Bloomberg.) We then put a press release out a week before the earnings release, announcing that it was going to be in a notice and access format.
We had planned for the release to go out at 5:15 PM on Feb 26, 2009. Leading up to that time we worked with our vendors to get the content ready for both the internal and IR website. Once ready, we notified NASDAQ and provided them with both the notice release and the full release, along with instructions explaining how the notice-and-access would work. NASDAQ knew other companies were going to be using this type of model soon, so they were open to it and gave us the go ahead.
Around 5:15 PM, the notice was put out on the wire and the PDF went live on the site. Shortly thereafter, we converted the text of the release to HTML and linked to an excel doc for all the financial tables. Using Excel for the financials made it much easier to get the HTML version online and as it turns out, was a preferred format for the analysts. Moving forward we are planning to simultaneously provide HTML/Excel and PDF versions.
What was the response from the media, analysts and your investors?
This was very much a non-event. Not a single person from the media or analyst complained about having to click to get to the release. All of the typical media outlets, web sites and analysts treated the news as normal. There was no feedback, positive or negative from any of our investors or stakeholders.
Analysts did comment that they loved the downloadable excel doc for the financial tables. They said it made it a lot easier because when tables are in the release, it’s a pain to copy and paste text financials into excel.
Because there are other companies in our space such as MarketAxess that use a notice-and-access approach to announcing their monthly volumes our analysts may have already been comfortable with the format. But in general, I think notice-and-access just simply makes sense – there isn’t anyone who doesn’t understand how to click a link.
Once the notice passed the wire, I emailed all the analysts and the PR team did the same to their list. The email included the full-text of the release and the excel tables. I can’t see how it could have been any easier than sending them the release directly. We gave them every possible way to get the content.
Internally the finance team was very pleased to only handle one version of the release. Before we went ahead with anything, I reviewed everything with legal and they were OK with it. So there were no problems internally and everyone was pleased with the output.
Do you have any best practices that you can share for those considering Notice-and-Access?
- The first time you do this, put out a press release a week before the actual release announcing that it is going to be in a notice-and-access format.
- Be sure all links have http:// in front of them (www.company.com doesn’t work in all systems).
- If your IR web site is hosted separately from your main site put the links on both the IR and main site, just to ensure the release will be available even if something crashes.
- Once the notice crosses the wire, email the full release (along with excel tables) to your mailing lists.
- Be sure to only include clean URL’s in the notice release i.e. http://www.bgcpartners.com/ir and don’t use URL’s that are messy like: http://phx.corporate-ir.net/phoenix.zhtml?c=209058&p=irol-newsArticle&ID=1260718&highlight=
- In the notice release include the text if you can’t click on the link then copy and paste in the URL into your browser just to make it as easy as possible for the reader to link through to the site.
Do you think a benefit of Notice-and-Access is having investors visit your site where you can provide more context to the news?
Using notice-and-access does provide the ability to provide more context and it does help to drive people to your site. However, I haven�t checked web site page views since the release so I don’t know how much impact it has had in this case.
Will you continue to use Notice-and-Access for your news?
Yes 100%. For our next one we’ll use notice-and-access again but will provide an HTML version with Excel tables on our site rather than just a PDF . The notice-and-access model is less error prone, takes less time and resources and saves money so it just makes sense to continue using it for earning releases.
How about web site only disclosure? Any plans on that front?
Web disclosure is likely years away because our web site is not highly followed. Using notice-and-access is quite inexpensive and gives us all the benefits of disclosing through the web but without the grey area of how to disclose solely through our website. Because we are a very legal focused company, we will likely be a late adopter to web only disclosure. This would be different if we were a highly followed company. We’ll wait to see how others implement before going this route. For now, notice-and-access is the perfect model for us.
Thanks Jason, is there anything further you’d like to share with our readers?
If you are NIRI member, be on the lookout for a web panel discussion on this topic by NIRI national.
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