Often spoken of as a (if not the) necessary element in restoring/repairing financial markets, transparency seems to be fundamental to new regulatory frameworks and discussions between key figures. But, what does it really mean? And more importantly, what real impact will it have?

In the UK, the freedom of information act means anyone can request and receive information from government. It creates the "right of access" to information held by public authorities. This includes all e-mails. The result? Key decisions are now no longer made via technology. Discussions are held in person and accountability is limited. Certainly, this is a case where improved transparency has had negative repercussions. Consider this in the context of recent financial cases: with regards to LIBOR, e-mails, text messages and other communications are have been fundamental to our knowledge of the manipulation. Should these not have been available, our understanding would be much more limited.

Transparency, definitionally speaking, means something is clear and easy to perceive or detect; in financial markets (and according to the SEC) transparency means "timely, meaningful and reliable disclosures about a company's financial performance." True transparency, is "not just more data with the unintended consequence of investor overload and an unnecessary reporting burden on companies", but is companies disclosing the right information to investors who are financially literate enough to understand.

On a person-to-company level, financial statements, while widely available, are frequently misunderstood. On a company-to-national level, new regulations regarding transparency are increasingly difficult for institutions to meet. Last week, the European Commission pushed for tougher disclosure rules in Basel III - forcing banks to publish profits and taxes in every national jurisdiction in an effort to minimize tax avoidance. Credit rating agencies (CRAs) are equally opaque - meant to help people understand financial instruments there is a lack of understanding regarding company ratings and risk. The US government is suing S&P for inflating ratings superficially, suggesting a need for 'transparency' exists in that space as well. Board governance, short terminism and remuneration are all areas that must, and are, being questioned and altered.

Don't misunderstand me, I am all for the concept of improved transparency and believe it is necessary for the correct functioning of financial markets and economic growth. I am somewhat skeptical, however, of what transparency means, what externalities exist from it and whether we can regulate ethics into the system.

What we do know is that previous systems do not work (in the context of public security, not necessarily with regards to economic growth). What makes us think these new ones will?

We must demand from our governments evidentiary support of regulatory criterion. We must also work to improve our understanding of these matters, analyse financial statements, and question public companies. Primarily, transparency itself must becomes clear.