Whose side is an Exchange on when the chips are down?
The stock market is supposed to balance the interests of all stakeholders, which is understandable when everything is smooth, but which way does an Exchange lean when careful judgments are at stake? Well, the NASDAQ certainly comes out on top as far as small retail investors are concerned! The Exchange is ruthless when it comes to statutory returns, and makes no exceptions when it comes to warning erring member companies to fall in line, and even asking them to leave the list if need be.
This can hurt business because management teams always have options to participate in more lenient listings. Unfortunately, not all Stock Market Exchanges have standards as tough as those of NASDAQ: they look the other way when companies miss statutory reporting deadlines, in unfair bids to curry favor with their clients.
The interests of retail investors are safeguarded when Exchanges put discipline before spurious marketing objectives. That is why NASDAQ deserves kudos for its unwavering commitment to the best governance conventions. Investors everywhere can rely on NASDAQ to ensure that companies in which they have investments submit essential reports in time. Delisting from NASDAQ is a sure sign of a careless management, and perhaps a time to switch loyalties.
It sometimes makes good business sense to lose customers, at least in a stock market context. However, much of the merit goes waste when errant companies find other Exchanges to support their recalcitrant ways. Therefore, regulators should be pro-active in enforcing uniform reporting standards for everyone, and equal action for all non-compliance as well.
There used to be a time when Exchanges bothered little about each other, but competition has geared up of late! NASDAQ already has a significant slice of the London Stock Exchange, and plans decisive moves to enhance its holdings. The era of domestically owned stock markets is coming to an end: international investing will flow naturally to the best managed Exchanges. NASDAQ is well poised for a pole position in this emerging scenario, given its sterling record in making no exceptions in hauling up members which are late with filings.