Between the lines: Merger just the ticket for investors

The Australian Stock Exchange, in merger talks with its New Zealand counterpart, must be scratching its head at the new standards of policing set by its prospective partner's investigation into Advantage Group.

Falling short of "censuring" the company for breaking listing rules when it released its profit result last week, the Stock Exchange's market surveillance panel settled for "criticising" it.

A slap on the wrist with a wet bus ticket was replaced by the threat of a slap on the wrist with a wet bus ticket.

Far be it from us to call into question the thoroughness of the panel's inquiry, or the validity of its findings.

It says it obtained a detailed explanation of Advantage's actions from the company, its directors, senior executives and legal adviser.

Panel secretary Philippe Leloir says he also talked to a journalist who was at the briefing, but not to any of the analysts. He said the panel handed out a lesser "penalty" because, although the company broke listing rules, the panel was satisfied Advantage did not intend to withhold information or mislead or deceive.

But if Advantage did not intend to mislead anyone, what was it thinking of when it released its profit result in such a ham-fisted way?

Such sloppy behaviour is presumably the last thing the e-brat leader and new member of the NZSE Top 40 wants to be known for.

In recent months, the company has stressed the presence on its share register of some of the country's leading institutional investors.

What isn't new is criticism of the panel for its lack of teeth.

However, errant companies might be in for a rude shock when the two exchanges merge.

Rules and their enforcement across the Tasman are a lot tougher, with listing rules enshrined in corporations law and not just contracts between the exchange and its companies, as is the case here.

A serious breach of listing rules - deliberate or not - can result in financial penalties and even criminal charges.

Synthesising listing rules and their surveillance between the two exchanges will be just one of many topics to be kicked around in upcoming merger talks.

In the meantime, one way to avoid a repeat of Advantage's behaviour would be to adopt the practice of the Australian and leading United States exchanges, where companies are required to post their results on the exchange's website, in a consistent format clear to all, almost as soon as they become available.

That would stop a company even contemplating a staggered release of the kind Advantage managed last week.

At present, the Stock Exchange requires only companies on its fledgling New Capital Markets board to post results on its website.

It shouldn't be too difficult to extend such a measure to its main board companies, perhaps with the help of a leading edge internet software provider.

Any candidates spring to mind?