The then-pending issue of Mifid II dominated discussions at the IR Magazine Think Tank – UK & Ireland 2017, which was held in London in November. With a nod to Donald Rumsfeld, the event focused on Mifid II from the point of view of ‘known knowns’. Three central areas were highlighted, the rst being the oft-cited issue of research – which, it was agreed, is going to be more directly paid for. The event heard this could mean research ‘going underground’ as it will no longer be as visible or as prominent, creating evident problems for IROs. Moreover, the view was that investors will pay only for premium research.
The second area was the issue of corporate access, with investors viewing this as vitally important for the future, even as a cited survey of UK fund managers reveals that they will not be willing to pay brokers to set up corporate meetings under Mifid II. Third was the belief that corporate broking could well be set to dwindle post-Mfid II, with the think tank view being that IROs could have to become their own ‘in-house corporate broker’.
It’s an issue IR professionals might not have considered before, but now may need to. Together, these factors are the ‘oil that make the market machine work,’ observed one expert. And what pays for the oil, is – of course – those that buy and sell shares.
On a more practical level the think tank heard that, depending on the team, there will be a need for IR professionals to ‘tool up’ because there is more work coming their way as a result of Mifid II. Typically, investor relations teams will need to devote more time to institutional networking, curating research and corporate access.
A number of warnings were heard that many companies are still underestimating the impact Mifid II will have on the way companies interact with the buy side. The consensus was that the situation is going to hit mid-cap companies the hardest but think tank attendees also suggested it will have a bigger impact on larger companies than those rms realize. As several observers noted, this is all contributing to a great deal of nervousness, which currently shows no signs of abating.
One big challenge stressed again and again was the need to educate the senior management team about what Mifid II means and the key importance of the IR function within this brave new world. In essence, a wait-and-see approach was not an option, attendees said: it was time for IR professionals to seize the moment.
Think tank takeaways
It’s time to take control and benefit from bringing services in-house.
Small and mid-caps will have to work harder in the Mifid II environment.
Sell-side research is due a long-term shake-up.
You need to prepare for more liaising with the buy side – and you need to start now.
Technological solutions are important but they are just an enabler to get what you want.
Disciplined tracking and updating of data is necessary – choosing the right CRM is important, but how you use it is what really matters.
Post-Mifid II, time will be precious so IROs must be more selective about who they spend their time with in 2018.
Innovation doesn’t have to be futuristic. One of the most impactful channels can be as simple as emailing a newsletter round-up.
Test your website for intuitivism. Would a child be able to nd your documents?
Think about data - what are you making available?
How will it be used by your constituents? How can it best help you?
Tidy up your website as this is the rst port of call for the buy side.
Preparedness, response and recovery constitute the right approach to crisis communications.
Look to your friends – and don’t forget to use internal and external resources effectively.
Be prepared: know who owns your stock and ensure they understand your business case.
Talk to your corporate brokers. Find out what services they are going to offer after Mifid II.
Also talk to all the analysts who cover your stock and nd out what they are going to be doing post-Mifid II.
Find the momentum for management to get behind IR. It is a fantastic opportunity for the industry to come from behind the screen and into the spotlight.
Better overall communication with the sell side will be needed going forward.
DEALING WITH DISASTER: EFFECTIVE IR IN A CRISIS
When looking at and understanding IR in the heat of a crisis, the think tank suggested several useful and thought-provoking pointers. The first was that regulatory announcements now speak to multiple audiences so IROs should be wary of the tone taken, show appropriate and suitable empathy and avoid any excessive legalese in such announcements.
Investors will form important judgments based on how the IRO communicates with other audiences such as customers, regulators and employees. Here, it was noted, lock-down is not an option so thinking about an all-embracing effective approach is essential. In these instances, written communication is being superseded by visuals: and if it isn’t your company talking about ‘your’ crisis on TV, it will be someone else. Keep this in mind for presenting media messaging.
A key point was that, in some crises, investors remain wholly supportive of management but the company can be taken down by other audience reactions. The media remains in uential, but speaks ultimately to consumer audiences. And this should be kept in mind: consumer tweets will be quoted extensively, and social media can now move share prices – so it needs to be monitored and pre-empted.