Small Cap Network Launches Seminar Series on Market Liquidity Concerns
In response to pressing market structure issues amongst smaller companies listed on the AIM and PLUS markets, the Small Cap Network has launched a series of networking round tables to examine innovative solutions.
The first event is scheduled for Wednesday October 6th at the London Chamber of Commerce and is titled 'Escaping the Liquidity Trap'.
With market-makers widening spreads in the wake of the credit crunch and mainstream media attention focused elsewhere, small and mid cap companies face an increasingly challenging task in communicating with investors, making their shares accessible and liquid, and improving their market exposure. The seminar will focus on strategies for improving trading volumes and raising awareness of smaller company stories among investors, both institutional and private.
Sophie Douglas, Manager of Sharemark, said:
Liquidity and market visibility are a constant cause for concern for smaller UK listed companies. In many cases, institutional investors are unable to invest in smallcaps due to size restrictions, while private investors are deterred from investing by liquidity or are difficult to reach through traditional channels”.
The Small Cap Network is an industry Working Group, founded by Stockopedia and Sharemark, which focuses on issues of common concern in the UK smaller companies market. The Small Cap Network works with respected Industry Trade Bodies such as the Quoted Companies Alliance to tackle pressing issues including liquidity, access to information and media visibility through arranging events and publishing White Papers.
In addition to a presentation by guest Speaker, Gavin Oldham, CEO of Share plc, the event will include an expert panel discussion followed by networking opportunities. The panel includes representatives from the Quoted Companies Alliance, Aventus Capital Management, Edison Investment Research, and Pelham Bell Pottinger. The event is targeted at UK listed company CEOs, FDs, IROs and AIM company advisers and is free to attend.
Edward Croft, CEO of Stockopedia, added:
We are excited about this latest initiative and hope that it will help encourage a resolution of the critical issues that exist on the UK market and other international markets in relation to smaller company liquidity. The Small Cap Network welcomes any participants who are willing to proactively contribute to market solutions.”.
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As per our Terms of Use, Stockopedia is a financial news & data site, discussion forum and content aggregator. Our site should be used for educational & informational purposes only. We do not provide investment advice, recommendations or views as to whether an investment or strategy is suited to the investment needs of a specific individual. You should make your own decisions and seek independent professional advice before doing so. Remember: Shares can go down as well as up. Past performance is not a guide to future performance & investors may not get back the amount invested.
Share plc is a holding company. The principal business of the Company is made up of two integrated activities provided through The Share Centre Limited, which include the provision of custodial administration whereby the Company acts as nominee for a number of different types of accounts, including Share Accounts, individual savings accounts (ISAs) and Child Trust Funds, and a dealing service to allow customers holding accounts to trade investments, including equities and funds. In addition, the Company operates a fund administration business (Sharefunds) and its own market platform for trading shares (Sharemark). The Company operates in three segments The Share Centre, which is the main trading business and provides stock broking and custodian services to retail investors; Sharefunds, which operates a fund administration service, and Sharemark, which operates an alternative share market, on which Share plc shares, amongst others, are dealt. more »
13 Comments on this News show/hide all
Hmmm, wonder who that could be... :o)
Great initiative btw - just prompted to look for it by an email from ShareMark and saw this post of two weeks ago buried without comment.
SM
Ah yes. That will be me then. Maybe I'll even wear a suit!
Roll out SETS to the entire market, get rid of the RSP and make offering DMA compulsory for all brokers.
Also ban OTC share trading via CFDs (synthetic DMA excepted).
Allow the poor thick retail investor access to sell-side research.
Get the government to remove Stamp Duty.
Get the LSE to bring its fees down and more into line with North America.
Completely reprogram the UK population's attitudes to the stockmarket.
That should just about do it.
What you need to create is a market where this can happen.
From zilch to a billion dollars (4c to $10 = 250 bags) in two years, and it's real value, not "dot-com" nonsense.
One thing I didn't mention in the previous post is not related to the secondary market, rather it's to do with how equity is raised on the primary market. One reason Canada can produce stories like Ventana Gold is because there is a well established mechanism for doing placements with "over-enthusiastic" retail punters at high prices during periods of exuberance, thereby significantly reducing dilution during the growth period. Money in London is almost always raised from professionals, who a) want to pay as little as possible for their exposure and b) are fundamentally disinterested except as to how things affect their "spreadsheets". This leads to what I would call a "secular dilution" effect.
In reply to Mattybuoy, post #4
Hi Mattybuoy,
Would be grateful if you could elaborate on that a bit. In particular, how are costs of doing so kept modest for companies, whilst ensuring that invstors are adequately informed?
Over here, many companies cite the expense of issuing prospectuses as a reason for using private placements rather than open offers. OTOH "full and frank" disclosure is also an important aspect of trying to create a level playing field.
Cheers,
Mark
I don't really know the details, I've just noticed how often mining juniors are able to raise funds after a hike in the stock price. It's always private placements ("brokered" or "non-brokered"), and seems to involve what they call a "short-form" prospectus. You can see these at SEDAR if you're interested. I've not looked to be honest.
The commissions/warrants and so on for these deals are generally rather expensive, but if you can raise equity at $1 rather than 50c it's worth it. Dilution is the worst enemy of a cash-burn company.
I have been told that depending on the company and it's situation, you can get in on these deals with as little as $10,000. Not in a position to even try it myself though.
The basic point I am trying to make is that retail is considered an asset to the market as opposed to a liability or annoyance as in London.
Very fair point Matty and sadly the brokers in London do, I have to say, a preety poor job in terms of looking after a company's shareholder base - not aided by regulatory nonsense at both uk and eu levels eg "sophisticated" investors.
Would be interested to hear how the discussion went on Wednesday - was there any discussion on the Prospectus Directive in relation to the concerns above?
Will there be a transcript available at some stage?
Cheers,
SM
Morning SM
I thought it went very well. I did see Marben and Carmensfella there.
As it was conducted under Chatham House rules, there won't be a transcript but perhaps Ed or Dave will summarise.
Thanks to Ed and Dave and the others for setting up the debate.
In reply to StrollingMolby, post #8
Hi SM, we are doing an extensive "white paper" summary of the Small Cap Network discussion - no attribution of comments as per Chatham House rules - but it should give you a good feel for the themes. This should be ready mid to late next week.
Thanks to DJP, Marben and Carmensfella for their help and involvement. More to come on the event front later this year.
Cheers,
Dave
Thanks for the reply, Darron. It's a shame I couldn't get away from the office then, as I hadn't realised it was operating under CH rules. Nevermind, I shall know for next time!
Some unattributable bullets/conclusions would be good to mull over, if Ed and Dave agree?
fwiw - i have largely given up on aim - i usually go to the tsx/tsv exchanges for mining shares - with a tdwaterhouse account i can post bids or offers directly on the order book and sit back and wait in line for someone to fill the order - why buy on the offer when you can buy in the bid?
why didnt Plus adopt this system? - looks like they missed a trick!
Schober
There was a lot of comment about the mechanism of making markets on Aim and smaller companies in general. Personally I'd agree with you that a move to order driven system is by far the better option than pathetically thin books being held by the MMs.
I'd argue as well that spread bets have reduced liquidity - well, why pay cgt? The contra argument being that the SB co's hedge in the market but then that's only their net exposure so one trade as opposed to the underlying positions going through the market.
SM - shame you couldn't make it. Would have been nice to finally meet.
Must dash - kids are killing each other.