News

September 08, 2008

A Toothless Market That Offers No Liquidity And Locks Its Directors Out - Just What Exactly Is The Point Of An Aim Listing?

By Alastair Ford

What is it with the Aim regulators? Are they blind, ignorant or simply somnolent? To many it seems that amid the summer’s conflagration of valuation all the Aim authorities did was fiddle while the market burned. It may be more to do with the market itself, of course - structurally flawed, the regulators are powerless to make a difference. One way or another, resources companies listed on Aim took a beating over the summer. And the whole year hasn’t exactly been a bed of roses. Of course, it hasn’t been easy elsewhere either. The Toronto market sank under a deadweight of disinterest this summer too, and after some tentative steadying of the ship over the last couple of weeks, is now waiting nervously to see what autumn has in store. The picture’s not been too much better in Australia, although overall it’s to Australia that most of the surviving near-term bulls seem to have migrated.

Across the globe, weaker commodities prices and the wider withdrawal of cash from equities in general has hit hard, but on Aim the crunch was especially pronounced. Two factors really put the squeeze on. One is the structure of the market itself, and the way trades in most Aim-traded junior companies go through the market maker system rather than being settled on a matched-bargain basis. This is a question of a liquidity, the perennial weakness of Aim, but one that has looked particularly...