Insights 
VT 
The US Securities and Exchange Commission (SEC) is considering a proposal to shift from quarterly to semi-annual earnings reports. This follows a request by President Trump, and a rule change may be proposed by SEC Chairman Paul Atkins.
The Republicans have a 3-1 voting majority, allowing for a simple majority vote to approve the change. If implemented, this would alter the established frequency of corporate earnings disclosures, providing less frequent updates to investors.
Reducing Regulatory Burdens
This potential change aims to reduce regulatory burdens and allow managers more focus on running their companies. President Trump highlighted the contrast between short-term management perspectives and longer-term strategies seen in countries like China.
Chairman Atkins clarified that this remains a proposal, signalling that final decisions are pending. This leaves room for further discussion and potential lobbying before any rule change becomes official.
Given today’s date of September 19, 2025, the proposal to end quarterly reporting introduces significant uncertainty, which is already causing a reaction in the derivatives market. We expect a broad increase in implied volatility as the market prices in longer periods without official company updates. The CBOE Volatility Index (VIX), often called the market’s “fear gauge,” has already seen a notable uptick of over 12% this week on this news alone.
Adjusting Strategies
Traders should immediately begin adjusting strategies away from the traditional quarterly earnings calendar. Options that are positioned to capture a specific earnings event in, for example, October or January, will now have their event-driven premium re-priced or removed entirely. We are therefore shifting focus to longer-dated options that can capture the new, more significant semi-annual announcements.
The cost of hedging is likely to rise, as options premiums will need to be higher to compensate for the extended risk period between reports. Looking back to the market chaos of early 2020, we saw the VIX spike above 80, demonstrating how a lack of forward visibility dramatically increases the cost of portfolio insurance. While this is a regulatory change and not a black swan event, the fundamental principle of uncertainty driving up option prices remains the same.
We can also look to European markets, which largely adopted semi-annual reporting after a rule change back in 2015. Their experience shows that volatility tends to be more subdued for long stretches, followed by much larger price swings around the two major reporting dates. This suggests a new trading landscape where patience is rewarded, leading up to explosive, high-stakes reporting events.
The volatility spike around these new semi-annual reports will likely be much larger than what we are used to. Historically, S&P 500 stocks have experienced an average volatility increase of about 77% on quarterly earnings days. We can now speculate that this effect will be substantially magnified as six months of corporate performance and surprises are digested by the market all at once.
