Communication is at the heart of the regulatory framework for protecting investors.
It rests on the premise that an investor can make an informed decision on whether to buy, sell or hold securities, or how to vote on corporate matters.
If an investor has full and accurate information about the company, its business and financial position, the security it is selling, and any merger, or other transaction in which it is engaged, it helps them to make better decisions about their portfolio.
As computing power has become increasingly more powerful and comparatively more affordable, technology has transformed communication in the capital markets.
Communication technologies have aided in making the capital markets more efficient by providing all participants with faster, more effective means of exchanging information.
These recent advances in information and communications technology are resulting in markets that are more efficient and transparent and better able to handle increased trading volume.
In these respects, the impact of new technologies upon the securities industry as a whole has been positive.
Technology has helped to level the playing field between large and small companies by reducing disparities between large and small investors' ability to access information hence helping companies to raise capital more effectively by giving them better access to potential investors; and giving companies new avenues to communicate with shareholders.
Similarly, it enhances the ability of investors and their advisors to make informed investment and voting decisions by giving investors information faster in electronic format, as databases can be searched and financial information be analysed more readily.
Issuers are now electronically providing a substantial amount of information and services to a large number of investors, particularly via the Internet. Investors, in turn, are taking advantage of the enormous amount of information that is available electronically from investment companies, and are making additional efforts for increased electronic information flow.
FINSEC plays a critical role in providing information to investors. Information can be in the form of public announcements by the company on upcoming events such as meetings or proposed transactions, release of annual financial reports or cautionary statements that are meant to give shareholders prior indications about possible significant upcoming transactions.
Dissemination of such information can be through the press, printed circulars to shareholders or company website uploads. Social media has also become a very effective way of information dissemination.
Indeed the disclosure and dissemination requirements are crucial elements to protecting investors and promoting fair and orderly markets and technology has revolutionised the communication between issuers and investors.