Wall Street questions Trump’s proposal: Can the SEC approve changing quarterly reports to semiannual reports? Increased uncertainty? Will it further stimulate stock market volatility?

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This Monday, U.S. President Trump proposed requiring companies to issue financial reports on a semi-annual rather than quarterly basis, claiming the move would both save costs and allow management to focus on company operations. Wall Street reacted with mixed opinions. Some analysts believe there is a 60% probability of it passing, but most market participants worry that such a change would reduce transparency and increase stock market volatility.

The current quarterly reporting system was implemented by the U.S. Securities and Exchange Commission (SEC) in 1970, aiming to improve market transparency after the 1929 U.S. stock market crash. As Wallstreetcn previously noted, procedurally, changing the quarterly reporting system does not require congressional approval but only needs to pass a majority vote within the SEC. Currently, three of the SEC commissioners are Republicans, one is a Democrat, and one seat is vacant.

TD Cowen analyst Jaret Seiberg estimates there is a 60% chance the SEC will advance Trump’s proposal for semi-annual reporting. Evercore ISI’s chief political affairs and public policy strategist Sarah Bianchi said that the process to switch from quarterly to semi-annual reports could take six to twelve months.

Although the SEC may change the fifty-year-old quarterly reporting regime at Trump’s behest, Wall Street insiders have raised doubts about the proposal’s potential negative consequences. Market observers worry that reducing the frequency of company disclosures will weaken accountability and increase stock market volatility. Investment institutions warn that longer intervals between reports would increase uncertainty.

Sameer Samana, global equities and real asset head at Wells Fargo Investment Institute, said, “In investing, more frequent and more information is always better than less frequent and less information.”

Policy analysts predict varying probabilities of implementation

TD Cowen’s Jaret Seiberg believes that for Trump’s nominee for SEC chair, Paul Atkins, fulfilling Trump’s proposal

“seems like an easily achievable policy win to present to the President. This also aligns with his focus on deregulation. Thus, we believe that shifting from quarterly to semi-annual reporting is no longer impossible, though not yet certain.”

He also estimates that SEC staff “would need at least six months to draft the proposal and gather the economic data needed for rule changes before it could pass judicial review.”

Evercore ISI’s senior managing director Sarah Bianchi holds a more cautious attitude. She noted:

“Our preliminary judgment is that Trump is unlikely to push aggressively for rapid follow-up action; Atkins will have room to start normal SEC procedures.”

Ed Mills, Washington policy analyst at Raymond James, questioned the change’s feasibility, saying:

“Quarterly reporting is unlikely to disappear, because it is required by the 1934 Securities Exchange Act. I don’t think Congress will amend that requirement. Congress’s most recent action was to tighten these reporting requirements through the Sarbanes-Oxley Act.”

Investment managers worry about declining transparency

Several investment professionals have expressed concern about reduced transparency.

Kim Forrest, chief investment officer of Bokeh Capital Partners, believes:

“It’s a bad thing for portfolio managers, because it reduces two channels of communication. Companies disclose specific facts in reports, and most also hold earnings calls where dialogue occurs. These public Q&A sessions generate important information. Missing out on these weakens all investors’ ability to better understand company prospects.”

Wells Fargo Investment Institute’s Samana emphasized the importance of information frequency: “At a high level, because there are longer intervals between reports, this will lead to greater uncertainty. Greater uncertainty will also exacerbate market/price volatility when companies do eventually report.”

Newedge Wealth’s portfolio strategy head Brian Nick pointed out potential valuation impacts, stating:

“While the (Trump proposal’s) goal is to have investors and companies focus more on long-term development, it increases equity market uncertainty and could lower valuations (i.e., increase risk premium) due to less frequent information releases. As the likelihood and impact of missing expectations grow, earnings season volatility could also increase.”

Market volatility may intensify

Analysts widely expect reduced reporting frequency to increase market volatility.

Matt Maley, chief market strategist at Miller Tabak + Co., said: “Lack of transparency will increase challenges for investors but will also free up company management to focus more on long-term business. This is truly a double-edged sword. It will require more accurate analysis from Wall Street. This is also negative for options traders, who make substantial profits when companies report earnings.”

Piper Sandler & Co. chief investment strategist Michael Kantrowitz voiced support: “I say amen to this! The Fed should also be ‘steadily proactive’ rather than react aggressively—combining both could sharply reduce stock market volatility and lessen short-termism.”

The quarterly reporting system, in place since 1970, has been a cornerstone of U.S. market transparency. The proposed change would bring the U.S. closer to the U.K. and E.U.’s semi-annual system, but critics say it could undermine the U.S. market’s informational advantage.

Risk Warning and DisclaimerThe market carries risks, and investment requires caution. This article does not constitute personal investment advice and does not take into account the special investment goals, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article suit their specific situation. Investing based on this is at your own risk. ```