Aquis Exchange is aiming to kickstart the market for smaller companies in London by handing stakes in the specialist trading venue to the brokers that use it most.
The plan is designed to reboot the AQSE market aimed at companies wanting to go public but which are too small for a listing on the far bigger and higher-profile Aim market.
AQSE exchange has struggled for profitability under several different owners since it was first launched in 2005 as Ofex. Aquis bought the venue, then known as the Nex Exchange, from Chicago’s CME Group in March for a nominal price of £1.
Brokers Canaccord Genuity, Liberum, Peel Hunt, Shore Capital, Stifel and Winterflood Securities have all signed up to the plan which could see them collectively own up to a fifth of AQSE within three years.
“We're going back to the days when the stock exchange had incentivised the user with a stake,” said Alasdair Haynes, chief executive of Aquis, which will launch the plan on Monday. “The retail market is crucial to getting more liquidity,” he added.
As part of their effort to increase the volume of trading on the venue, the six brokers have agree to offer tighter spreads, the gap between what a seller wants for a share and what a buyer will pay, for at least half the stocks in the new premium segment of the AQSE to be introduced in January.
Companies in the segment will be bigger and better established, have a large free float of their shares and typically have market capitalisations of between £30m-£500m, according to Aquis.
Winemaker Chapel Down, brewer Shepherd Neame and Arbuthnot Banking Group are among the companies already listed on AQSE that are expected to qualify.
The launch of the plan comes after a report for the European Commission concluded that the UK had the largest listings gap in Europe, with more companies choosing to stay private and rely on other forms of financing. The study by consultancy Oxera said the UK had more than 3,500 large unlisted businesses, ahead of Italy and Germany.
A set of EU regulations, known as Mifid II and introduced in 2019, have been criticised by some for making it harder for smaller public companies to generate interest in their shares.
Iain Morgan, head of execution and trading at Peel Hunt, said the AQSE scheme could help companies attract investment capital.
“Following the implementation of Mifid II, some small and mid-cap listed companies have experienced a significant reduction in the liquidity of their shares, hindering their ability to attract equity investment,” he said.
Get alerts on UK equities when a new story is published