Timing is everything. Another bastion falls to disclosure.

Another bastion falls to transparency best practice. The guidelines produced by the Walker Working Group last week gives a recipe for greater disclosure by private equity companies and their ‘portfolio companies’.

On the company side, Walker has proposed a voluntary reporting framework that applies to private equity portfolio companies with more than 1,000 employees and at least 50% of revenues generated in the UK. Each portfolio company signing up to the code would produce an annual report within six months of their financial year end. This would include the identity of the private equity fund or funds that own the company, the senior managers or advisers who have oversight of the fund or funds, and detail on the composition of its board.

In addition, it would provide a business review - comparable to that required of public companies under the new Companies Act - that indicates main trends and factors likely to affect the future development, performance and position of the company's business. It should also include information on the company's employees, environmental matters and social and community issues.

The private equity houses themselves should disclose their investment approach and, for its portfolio companies, an indication of the leadership of the firm in the UK and confirmation that arrangements are in place to deal with conflicts of interest.

Of course the world has changed completely since the heady days in the summer when the entire industry was under a cloud, being attacked for invisibility on all sides. A high- profile trade union campaign against 'asset strippers' was followed by a row over the tax paid by those working for private equity firms. And there was ongoing debate about what effect private equity has on employment.

Today, the global credit crunch had affectively withdrawn the advantages that private equity firms had over listed rivals and made debate about new disclosure rules less urgent.

So the proposed code of conduct for big buy-out groups now lacks the public impact it might have had six months ago. And it will be criticised for lack of bite, in that the code is voluntary.

Despite these concerns, and the fact that apparently only some 25% of private equity companies are affected, these changes are a welcome start.

Sell side research – changes underway.

Research that has been the traditional preserve of the larger investment banks is facing a huge sea change from regulators, boutiques, and an increasing link to trade recommendations.

IOSCO, the collective for the world’s securities regulators, has this week published its latest thinking on how soft commissions among investors should work. It points to the differing rules applicable in different countries, and the potential conflict of interest among those providing and using the research. It concludes that regulators need to decide on their own regimes, but given who the research was done by, some degree of coordination in regulation is likely.

This report comes at a time when there are emerging trends among ‘boutique’ research firms. Japaninvest, an independent research house, has launched an execution service that it hopes will help smaller boutiques compete with the big investment banks.

The company, listed in Tokyo, has invited other independent research providers to join IND-X, which went live recently. With few asset management houses willing to pay directly for research, boutique research providers rely on devices such as commission sharing arrangements for their income.

These allow asset managers to pay an investment bank to execute a trade, but to say that a proportion of the money should be passed to third parties that have provided them with the most valuable research. However some independent houses have to wait to receive monies due to them.

And the investment banks have responded by launching their own joint venture – Trade Ideas Ltd – which bundles their research together and provides clear trading recommendations. Others have taken stakes in research boutiques.

Meanwhile, asset managers themselves are adding to their own research capabilities. The Grassroots system uncovers new trends by on-the-street research.

Another trend is in research boutiques focussing less on short term financial performance, and more on what one of them calls “extrafinancial” matters. Enhanced Analytics Initiative promises to divert 5 percent of their institutions' brokerage commissions to pay for research in everything from how companies treat their employees and govern themselves to their exposure to political and environmental risks.

What of the IRO and how they respond to this changing world? Clearly, finding out who can influence the company’s share price through publishing research and trade recommendations just got a whole lot harder.

Another ‘IFRS-scale’ task on the horizon?

Earnings. A word at the heart of much of the IR communications culture. We talk of earnings announcements, earnings calls, earnings releases, earnings guidance, earnings forecasts and so on. So what are we to make of proposals coming out of IASB and FASB to change the P&L statement in a way that would effectively remove the need to produce a single bottom line number.

Earnings, or the “bottom line”, is one half of the price/earnings ratio used by investors the world over as a simple guide to a company’s value relative to its peers.

Both the International Accounting Standards Board and its US counterpart, the Financial Accounting Standards Board, are currently developing proposals to change the contents of the main financial statements. And the Corporate Reporting Users’ Forum, analysts from both buy and sell side, has expressed concerns.

“We disagree with the proposal that there should not be an earnings sub-total within a performance statement. We find an earnings sub-total particularly useful in enabling management to communicate with us at a highly aggregated level”, they said.

In letters to the FT, apologists noted that the proposals are at a very early stage, and that analysts always dig deeper than a single headline number.

A couple of things are interesting about this. First, the fact that FASB and IASB – representing therefore IFRS and US GAAP - are cooperating, creates a consistency of approach which is welcome.

Second, an entire industry of investors and communicators would have to change. Crude it may be, but EPS forecasts and company guidance are one of the cornerstones of share price movements. Asking that industry to understand and reconcile "other comprehensive income" may be technically more accurate, but it would take a heck of a lot of getting used to. It is not overstating it to say it would be another “IFRS-scale” task for IRO’s and communicators.

A brave new world for trading and execution: what does MiFID mean for IRO’s?

Huxley’s novel describes an (ironic) utopia where humanity is happy and technologically advanced, but deprived of keys to their identity. Does today’s onset of MiFID create a new trading utopia, and at what impact on IRO’s?

As from today, new rules will remove many of the barriers within the European Union that have made trading in stocks an expensive hassle, introducing individuals and companies to a world of investing that their U.S. counterparts have long taken for granted.

MiFID allows financial firms to compete with one another across Europe, forces them to get the best prices for their customers and outlaws national exchange monopolies.
Various studies suggest that the cost trading and settlement is at least six times as high in Europe as in the U.S, and these costs are likely to fall substantially as new trading platforms such as BOAT, Chi-X and Equiduct, as well as the widely reported Project Turquoise, enter the market.

What are the impacts on issuers of securities? Among them, there is a likelihood that issuers’ cost of capital will fall, according to many including the European Commission.

On a more practical note, will IRO’s be deprived of key data that they need to do their job? With the increasing and far flung trading and settlement platforms, will consolidated intra day trading data be transparent? Time will tell, although Reuters and Bloomberg and others have made efforts to ensure that it is.

An anticipated effect could be a big increase in cross border trading emphasising still further the need for real time data access for IR teams.

And will these changes increase liquidity? The EU thinks it does, which will make it welcome news to most.

However, unlike Big Bang, MiFID is aimed at being a slow revolution. It is difficult to predict participants’ – especially fund managers’ – take up of the opportunities. Indeed at least 4 EU member states haven’t implemented the rules at all yet.

Nonetheless, raising capital across the EU will never be the same again.