Lawyers do it all the time. It is second nature for accountants and auditors. Investment bankers, private equity investors and traders snap to it at the drop of a hat. Over the past decade, these professionals have all been quick to state their case whenever a significant market regulation – be it SOX, Dodd-Frank, Basel capital requirements, IFRS or the various EU market directives – has been proposed or implemented.
Collectively under guild associations and individually as economic units organised as firms, these groups do not hesitate to make their positions known whenever government agencies announce plans for a new set of regulations that would affect their practices either directly or remotely. To back their positions for or against, these professionals have the arguments, the numbers and – importantly – the organizational resources to wage their self-interested campaigns. For them, lobbying is not a dirty word; it is a means of survival to stay relevant to their clients and employers.
Surveying the timeline of market upheaval and its ripple effects over the past three years, one would expect that IR professionals would have joined the bevy of speakers to state their positions on the slate of new market rules. Instead, it seems as if IROs, with few exceptions, unwittingly shirk from airing their views. Of course, one is assuming that IR professionals recognise how these events will define their relevance, growth and even career earnings ability –as consultants and managers – for years to come.
Nowhere is the pace and scope of market reforms, broadly labelled, more encompassing than in frontier markets. In fact, as a phenomenon, history would probably recognise this period as the Great Regulatory Rush. From Lagos to Accra to Nairobi and across the rest of the African continent, officials at stock exchanges and securities market regulation commissions are introducing materially significant changes at forced marches.
It is not far-fetched to claim that no single professional services group has more at stake in these changes than investor relations. Yet it is also the case that, as a group, IR in Africa is sleeping through what is the greatest show on earth in terms of capital market development.
The stimuli for these regulatory initiatives are twofold. While no one disputes the good intentions of regulators, the end results are often woeful in execution, so the first stimulus comes from the standard reaction of regulators to unsavory events in the past. In addition, they aspire to shape emerging developments in their desired image of how national markets should look.