The US Securities and Exchange Commission (SEC) is considering a change that would move earnings reports from quarterly to semi-annual. This comes after a request from President Trump, and SEC Chairman Paul Atkins may propose a rule change. The Republicans hold a 3-1 voting majority, which means a simple majority could approve this shift. If it happens, companies would update investors less often about their earnings.

Reducing Regulatory Burdens

This potential change is aimed at easing regulatory burdens and allowing managers to focus more on running their companies. President Trump pointed out how short-term thinking differs from long-term planning in other countries like China. Chairman Atkins mentioned that this is still just a proposal, and final decisions haven’t been made yet. There’s still time for more discussions and possible lobbying before anything is finalized. As of September 19, 2025, this proposal introduces uncertainty, creating some reactions in the derivatives market. We anticipate an overall rise in implied volatility as the market adjusts to longer periods without updates from companies. The CBOE Volatility Index (VIX), known as the market’s “fear gauge,” has already increased by over 12% this week due to this news.

Adjusting Strategies

Traders should start changing their strategies away from the usual quarterly earnings timeline. Options set to capitalize on specific earnings events, like those in October or January, may see their premiums adjusted or even eliminated. Therefore, we are shifting our attention to longer-dated options that can take advantage of the new semi-annual reports. Hedging costs are likely to increase, as options premiums will need to rise to cover the extended risk between reports. Reflecting on early 2020’s market chaos, the VIX hit above 80, showing how uncertainty raises the cost of portfolio insurance. This regulatory change, while not a black swan event, illustrates how uncertainty can still elevate option prices. We can also learn from European markets, which switched to semi-annual reporting in 2015. Their experience shows volatility tends to be low for long periods, followed by large price moves around major reporting dates. This indicates a new trading environment where waiting can lead to significant rewards before major, high-stakes events. The volatility around these new semi-annual reports is likely to be much higher than what we have seen before. Historically, S&P 500 stocks have seen an average volatility increase of about 77% on quarterly earnings days. We can now expect this effect to be even more pronounced as six months of corporate performance and surprises hit the market all at once. Create your live VT Markets account and start trading now.

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