Regulators have bowed to market pressure and scrapped requirements that main board listed companies immediately switch to mandatory quarterly reporting. Sources at the weekend said that protests from companies had prompted the regulators to abandon their controversial proposal in favour of a British rule, which allows existing listed companies to voluntarily adopt quarterly reporting. However, while the 790 existing main board companies will be given a three or four-year grace period to make the transition to quarterly reporting, all newcomers to the board will have to adopt it from the start. 'This two-tier system will help to ensure that Hong Kong could match the international trend to have quarterly reporting, while at the same it would give enough time for existing companies to prepare for the new regulation,' one source said. In a January consultation paper, Hong Kong Exchanges and Clearing suggested that all main board listed companies move to quarterly reporting. The exchange said the proposal aimed to bring Hong Kong into line with international practices. Quarterly reporting is mandatory in both the United States and the mainland, while it is voluntary but encouraged in Britain. During the consultation process, which ended last month, regulators received more than 300 opinions on quarterly reporting, reflecting mixed views on the subject. While some supported the move, critics, including many blue-chip companies, were strongly opposed to it. Justice Anthony Rogers, chairman of the Standing Committee on Company Law Reform, said he was not in favour of introducing quarterly reporting. 'Although there is a worldwide trend to require listed companies to do quarterly reporting, it does not convince me to change my idea on the disadvantage of the system,' Justice Rogers said. 'We must be very careful about introducing quarterly reporting and should not rush into it.' Justice Rogers said the US accounting scandals were proof that quarterly reporting may not necessarily help improve the quality of information given to investors. Instead, he said the requirement might pressure executives to chase short-term profit rather than pursue long-term growth. The Hong Kong Society of Accountants also urged the exchange to delay the introduction of compulsory quarterly reporting to allow companies to have more time to prepare for the changes.