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AIM to become exchange-regulated market

London Stock Exchange is to change Alternative Investment Market’s (AIM) regulatory status establishing AIM as a market that is not subject to European Union directives. From October 12, 2004, AIM will operate as an exchange-regulated market, relinquishing its EU regulated market status, which it has held since its launch in June 1995.

This decision by the London Stock Exchange follows several months of consultation and discussions with the AIM community, HM Treasury and the FSA about the impact of EU Directives on AIM.

This move will ensure AIM’s current regulatory regime and market structure will be preserved with continued regulatory oversight by the Financial Services Authority.

By losing its EU regulated market status AIM will avoid the obligations of the prospectus directive which requires a fresh prospectus for every transaction adding to the cost of any company attempting growth through acquisition.

Martin Graham, head of AIM, said: “AIM is the world’s most dynamic market for smaller growing companies and the London Stock Exchange is delighted that it can continue to operate the market in its current form. This change to AIM’s status secures its position and gives us a firm foundation from which to continue to grow and develop the market.”

The London Stock Exchange is considering further rule changes that may be required to ensure the continuing smooth operation of AIM as an exchange-regulated market. Market participants and the AIM community will be consulted in the coming months.

The last few months have seen the AIM market pick up, providing a much-needed route to liquidity for many VCs looking to realise their investments.