During this phase you can set the transponders of your ships to identify themselves to any empires you choose.  By default, foreign ships appearing on LRS are identified only by their number and tonnage.  When a ship is identified to another empire, that empire will be able to see the owner and ship class on LRS.  You can identify individual ships to other empires, or you can identify an entire class of ships (for example, all scouts).  Note that if you identify an entire class of ships, then any new ships of that class that you build automatically will have their transponder set according to that class' transponder setting.  

You must be in message contact with the empires to whom you wish to identify your ships.  Alternatively, you may set your ships' transponders to identify your ships to all foreign empires, known or not.

Note that loaded ships are never visible to foreign empires, regardless of their transponder settings.

Obviously, you can set the transponders only on ships that you own, or have just constructed during the Build phase of the same turn.  A ship's transponder settings are maintained throughout the life of the ship, unless a subsequent conceal command is issued. 

Allies: Allied empires always identify all of their ships to one another.