Remember that idea former President Donald Trump has been floating since 2018 about letting public companies report their financials just twice a year instead of every quarter? Well, it's not just a tweet or a Truth Social post anymore. The Securities and Exchange Commission is getting ready to make it an official proposal.
Think about how much of the market's rhythm is tied to that three-month cycle: earnings reports, dividend announcements, ETF rebalancing, even some executive bonuses. Trump's argument, which he's repeated several times over the years, is that breaking that cycle would give companies "greater flexibility & save money" and let managers "focus on properly running their companies." It's a vision of corporate America less obsessed with the next 90 days.
Now, the SEC appears ready to test that vision. According to a report from the Wall Street Journal, the regulator is preparing to propose making biannual reporting the new requirement, with quarterly reports becoming optional. Regulators have reportedly been chatting with stock exchanges to gauge the potential impact, and an official proposal could land as soon as next month.
SEC Chairman Paul Atkins recently shed some light on the process during an appearance on the All-In Podcast. "We are going to come out with a proposed rule and seek comment on it," he told hosts Jason Calacanis and Chamath Palihapitiya. He framed it as part of a broader effort to streamline things, noting, "Looking to simplify all of this."
Atkins also provided a quick history lesson. The U.S. had annual reports from the 1930s until 1955, then moved to semiannual reports. Both the U.S. and the U.K. shifted to quarterly reporting in the 1970s. Interestingly, the U.K. switched back to semiannual reporting in 2014, while the U.S. has stuck with quarters. The U.S. might finally be considering following its ally's lead.
The chairman acknowledged potential trade-offs. While smaller companies might benefit from the reduced burden, a downside could be less analyst coverage for their stocks. "I think this is a great debate to have right now," Atkins said, framing the upcoming proposal as the start of a conversation, not the end.
And what a conversation it will be. Once the proposal is published, a standard public comment period of around 30 days will begin, after which the SEC will vote. A proposal, of course, does not guarantee a new rule.
The debate already has some clear battle lines. When Trump revived the idea last September, it drew immediate criticism from some quarters. Former Treasury Secretary Lawrence Summers was particularly blunt, comparing CEOs who dislike quarterly reports to students who don't want grades. "The quarterly reports are about 'accountability and transparency,'" Summers argued.
Financial journalist Herb Greenberg took a slightly different tack on social media, suggesting the problem isn't the reporting itself but the guidance companies give around it. "Reporting quarterly is a good thing. The issue is guidance, short OR long-term. THAT'S what creates the short-term volatility as the algo's and everybody else play to THAT, and companies kowtow to the ‘meet or beat' game," he wrote.
On the other side, you have voices like CNBC's Jim Cramer, who has called the quarterly judgment cycle "brutal" for CEOs and declared, "We are too short-sighted."
So, get ready for a classic financial policy fight: efficiency and long-term focus versus transparency and market discipline. The SEC is about to formally ask the market which side it's on.
