Could the US scrap quarterly reporting?

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0:17Good morning from the Financial Times. Today is Wednesday, May 6th, and this is your FT News Briefing. All around the world, oil reserves are plummeting, and corporate America might kiss quarterly reports goodbye. Plus, HSBC's profits took a massive hit last quarter. We'll tell you what happened. I'm Mark Filippino, and here's the news you need to start your day.

0:52The world is running low on easily accessible oil, and it's happening fast. Global crude reserves dropped at a record pace in April, about 6.5 million barrels a day. That's according to estimates from S &P Global Energy, which tracks commodity prices. The U.S.-Iran war is no closer to a peace deal, and that means oil shipments are still stalled out of the critical street of Hormuz. It's been effectively closed since the war started two months ago. Goldman Sachs is now warning that there are only 45 days of refined oil products left worldwide. That includes things like gasoline, diesel and jet fuel.

1:26That's pretty bad timing as the summer travel season is creeping up on us.

1:36U.S. listed companies might not need to report quarterly earnings soon. The Securities and Exchange Commission said yesterday it was proposing a rule that would allow companies to report twice a year. Here to tell us more is the FT's George Steer in New York. Hi, George. Hi. So how big of a deal is this? I mean, how long has the Securities and Exchange Commission been requiring quarterly reports? So quarterly reporting has been pretty customary in the U.S. since the early 1970s. So we've had almost half a century now of companies listed in the U.S. having to file four reports. So the new proposal would cut that in two.

2:13Why is the SEC doing this? So SEC Chair Paul Atkins said on Tuesday that the current rules dictating that companies have to file four times a year are too rigid. The implication is that management is distracted by constantly having to prepare huge documents with all of their financials. And that, you know, by cutting the number of filings that these big companies have to make, executives will have more time to focus on growth and jobs and all of the good things that companies are meant to be doing. So it'd be basically shifting focus away from short-termism, which is the main complaint of how things are done now.

2:50Exactly, exactly. And Donald Trump actually kind of made this point first in 2018 during his first term, and then again last September when he said on Truth Social that companies in China have like 50 to 100 year views on growth and how they're going to boost jobs. So the US is kind of at a strategic structural disadvantage by having to file so frequently. Yeah, I think that's really important to note that the U.S. wouldn't be by any means the first country to pivot to the structure. But, you know, how significant would that be for U.S. investors? Well, I guess the investment ecosystem is kind of split on this idea, I guess.

3:28Some bodies that represent investors say that greater transparency and tighter disclosure requirements to make for more efficient capital allocation. You need information to allocate capital effectively, efficiently. So there is simply less information to go off for people who control hundreds of billions of dollars and that markets will become less efficient as a result. I have to imagine that this could change the way that companies do business. For example, maybe IPOs, initial public offerings, there's less pressure for them to do well right out the gate. And instead, things are a little bit more forgiving if they have half a year rather than, you know, a quarter to report.

4:11Yeah. And again, the SEC chair, Paul Atkins, who was nominated by Trump, he's promised to make IPOs great again. His argument being that rigid or, you know, as he would say, burdensome reporting standards have contributed to a shrinking of public markets that we've seen over the last 20, 30 years. What he means by that is that the sheer number of listed companies has shriveled massively. A lot of people who agree with Paul Atkins, say that, you know, the reason why some companies are staying private for longer is because they're not obliged to do all of this, jump through all of these hoops that public companies have to.

4:47Got it. So the idea is that if companies don't have to report as often, that's one less hoop they got to jump through to go public. George, I mentioned earlier that this is not final yet. What would need to happen in order to make this a done deal? So I think there is a 60-day comment period. So investors, companies, trade associations, and bodies can write into the SEC saying either this is a great idea and we're looking forward to it or this is a terrible idea and we think you should change course. So after the 60 days, the SEC staff will review those comments, finalize their recommendations, and then there'll be another vote at the SEC and then press release after that confirming that either the body will move forward with this decision to slash reporting requirements or that it has opted against doing so.

5:36And at that point, you and I might talk again, George. Great. Look forward to it. That's the FT's U.S. Markets Correspondent, George Steer. Thanks, George. Thank you.

5:50Some companies are starting to play ball with the U.S. government when it comes to security concerns over AI. Google, XAI, and Microsoft agreed this week to let the Commerce Department review any new models before they're released to the public. U.S. officials say they're looking for national security risks, more specifically, cybersecurity, biosecurity, and chemical weapons. This comes as senior U.S. officials raise concerns over Anthropik's latest Mythos model that launched in early April. It's very efficient, and it could turbocharge hacking. It's important to note, though, Anthropik is not part of this agreement with the Commerce Department.

6:33HSBC's quarterly results really let investors down. The bank's shares fell sharply on Tuesday after it revealed a fraud-related charge that cost the bank$400 million. HSBC said its credit losses were expected to amount to$1.3 billion for the first quarter. That's up 50 % from a year earlier. And the bad news didn't end there. It also blamed the Iran war for a drop in first-quarter profits. The FT's banking editor, Hortensa Aliyei, joins me now to chat about this. Hi, Hortensa. Hi. So first, what do we know about this$400 million fraud-related charge? What's the story there? Yeah, so the$400 million fraud-related charge is linked to a UK company that no one had heard of before February called Market Financial Solutions.

7:18It collapsed at the beginning of February under allegations of fraud and what they call double pledging of assets. So it was pledging the same piece of collateral to multiple lenders, which is an illegal practice. And HSBC had an indirect exposure to MFS, basically through lending that it was doing to Atlas, a lender owned by the private equity giant Apollo. The write-down, it makes it one of the most impacted lenders from the fallout of MFS. Right. And, you know, we should mention that Atlas and HSBC declined to comment for your story. How many other lenders have been hit by this particular fraud?

8:00Yeah, so the fallout is quite widespread. There's a lot of banks involved like Santander, Wells Fargo, Barclays, and now HSBC. There's also smaller private credit firms like Castle Lake, as well as obviously Apollo's Atlas. Now, Artensa, I mentioned that the war in Iran is impacting HSBC. How bad are things on that front? Well, they're anticipating that things could get a lot worse than they are. So they've basically set aside$300 million to cover impairments tied to the conflict. And that comes after its rival, Standard Chartered, set aside$190 million to actually deal with losses from the war in Iran.

8:41Both of these banks have quite a strong lean to the Middle East and Asia. and one of the big themes of the restructuring by HSBC CEO George Alhedry was that he would lean the bank more towards its home markets, but also exploit its strong presence in the Middle East. Yeah, that reorganization is something that we've talked about a lot on the show. Was there any good news for HSBC in these quarterly results? Yeah, definitely. I mean, HSBC is still performing very well. Its share price is up something like 50 % over the past year. And its revenues were up. It did take a hit on its profits, but it was largely tied to an increase in its costs.

9:22There's still some questions around whether Georgia Hedri is going to be able to deal with a headcount issue that HSBC has. I don't think there's been as big of a reduction as people were expecting. But on the whole, the bank's wealth management unit is doing very well. And its lean towards Asia has so far paid off. Hortensa Aliye is the FT's banking editor. Thanks so much, Hortensa. Thank you.

9:50You can read more on all these stories for free when you click the links in our show notes. This has been your daily FT News Briefing. Check back tomorrow for the latest business news.

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