The debate on quarterly reporting for US listed companies is ongoing, with suggestions to move to a biannual system. Donald Trump recently expressed his support for this change, emphasising a longer-term management approach.
Trump shared his thoughts on his social media platform, Truth, advocating for a shift from quarterly reporting to a six-month reporting cycle. He argues that this could lower costs and give managers more time to concentrate on company operations.
China’s Long Term Management Strategies
The proposal draws comparisons to China’s long-term management strategies, which are said to span 50 to 100 years. Trump previously backed this approach during his first term, maintaining a consistent viewpoint on the matter.
With the renewed push for semi-annual reporting, the immediate play is on uncertainty itself. While SEC approval is a long road, the noise alone can cause ripples in market volatility. We saw the VIX, a key measure of fear, close last week at 17.8, up slightly as this discussion began to circulate among institutional traders.
This potential shift would fundamentally alter the volatility landscape we trade on. The familiar rhythm of four earnings seasons a year, which creates predictable spikes in implied volatility for options, would be replaced by two much larger, high-stakes reporting events. This could mean buying longer-dated options becomes a more popular strategy to capture the extended period of uncertainty between disclosures.
We must remember that we have seen this proposal before, particularly around 2018. Back then, the idea was studied by the SEC but never gained enough momentum to become policy, reminding us that implementation is a slow, bureaucratic process. Therefore, for the next few weeks, the focus should be on trading the political headlines rather than a definite change in market structure.
Impact On Sector Volatility
A move to six-month reporting would not affect all stocks equally. We would expect increased volatility in growth-oriented sectors like technology, where narratives can change quickly and investors rely on frequent updates. Data from 2024 showed that tech stocks saw an average price swing of 6.2% on earnings days, a figure that would likely grow with less frequent reporting, making strategies like straddles more appealing.
It’s also useful to look at international precedent, as the US is not the first to consider this. The European Union ended its mandatory quarterly reporting requirement back in 2013, and their markets adapted by relying more heavily on other corporate communications and analyst reports. This transition occurred without major market dislocations, suggesting the ultimate impact could be more subdued than the current headlines imply.
