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Jun 27, 2017

Mifid II: An overused acronym, but what does it mean for day-to-day IR? Part two

How can IR teams prepare?

It is now clear that the new rules introduced by Mifid II will stretch already under-resourced IR teams even further and put additional pressure on IR budgets, which have been declining steadily over the last few years across Europe.

While the European Securities and Markets Authority and domestic regulators finalize the finer details, IR teams should waste no time in securing an adequate IR budget and getting the resources and tools in place to proactively deal with the new reality coming in seven months’ time.

1) Get your story straight

Take a good look at your equity story and those of your competitors. How do you measure up? Is it clear and concise, and does it put you ahead of the competition in the fight for capital? What is the market sentiment toward your stock? Seek an independent assessment to get an objective base line, rather than second-guessing or making assumptions.

Does your reporting support your investment case and is it consistent and easy to follow? Fund managers and analysts don’t have time to do detective work and go through pages and pages of templated reporting. Make it easier for them and you are much more likely to remain on their radar.

2) Be clear who your ‘customers’ are

It is a basic IR practice to have a good grip on who holds your shares and why, yet many issuers overlook the why. Shareholder ID surveillance combined with a regular independent assessment of your stock’s positioning in its sector will address this.

3) Brush up on your direct marketing skills

What is becoming increasingly important is to broaden your capital horizons and start building relationships with potential investors to support your liquidity. Basically, this means assuming the responsibilities of a corporate broker and going after those fund managers that are unlikely to come knocking on your door (or send an email). A proper pre-qualified targeting plan is no longer an afterthought but an essential tool in allowing IR teams to have better visibility and control over their IR efforts.

Also, with shrinking broker research, IR teams will need to reach out and market directly to a much wider pool of independent and boutique research houses, as well as fund managers, while servicing with greater care the remaining research analysts covering their stock.

Needless to say, resourcing and budgeting issues will be even more critical as a result.

4) Embrace technology

Technology is all around us. In our social lives, we tend to be far more adventurous in adopting the latest gadgets, yet IR as an industry is lagging behind. While there are plenty of innovative solutions available, there’s also a quiet reluctance of IR teams to embrace them. For example, it took audio and video webcasts a few years to become mainstream.

In preparation for the new reality where time really will mean money, IR teams should do an efficiency audit to see where technology can free up time for more value-added activities. From corporate access platforms to shareholder ID surveillance, technology is there to help in-house IR teams to improve their productivity.

Marina Zakharova de Calero is CEO at Conduit Communications