Is there enough choice for stock market investors?

Investing in the stock market can be a laborious task. Reading the latest research, calling up your broker, watching the latest trends on financial TV channels, subscribing to the Financial Times or reading Investment Week or Investors Chronicle.

And once you have done all that, it turns out that the same old companies being touted. How tedious.

What if you as an investor could have access to more than just the companies listed on the FTSE 100, FTSE 250 or FTSE 350? There is of course AIM(Alternative Investment Market) launched in 1995, which lists a diverse range of smaller companies; but there is also NEX (formerly known as ICAP) – which some might say is a direct competitor to AIM.

NEX Exchange originated in the mid-1990s in the form of OFEX. It was set up to offer companies easy access to public market financing, and to offer investors access to interesting growth-focussed companies.

Patrick Birley, Chief Executive of NEX Exchange says:

Back then, there was just a single market, which was not [very] healthy. Having a competitive offering in almost any industry is important. Monopolies general grow to become fat and lazy – charging too much and offering substandard levels of service. We believe that this is what has happened in the UK and it is why we are focussed on providing high quality services at very reasonable costs.

In the UK, there is only ourselves and the London Stock Exchange (LSE) offering public primary market facilities under a fully regulated structure. There are a number of platforms that offer similar services (such as crowdfunding sites) but these have varying levels of regulation and are often not suitable for ‘normal’ investors.

Birley – who before NEX worked at a number of exchanges including LCH Clearnet, the NYSE Euronext, the European Climate Exchange and the London Metal Exchange – believes the LSE price themselves at a very aggressive level.

I have seen a number of retail stockbrokers stop carrying data from the LSE because it is expensive, and we [NEX] feel offering an alternative is better in the long-term to create a competitive environment.

This junior stock exchange is home to approximately 85 smaller companies like brewer Adnams, wine producer Chapel Down, hotel and leisure company Daniel Thwaites and Arsenal Holdings, the group which operates Arsenal Football Club.

We have a number of different family-style companies on NEX making their first steps into the public market arena; we have a number of older breweries. On the technology side, we have a number of companies focusing on blockchain like Kryptonite 1 PLC and Coinsilium Group. We also have our first REIT (real estate investment trust).

This stock exchange could, potentially, offer investors a breath of fresh air. Instead of investing in BP or Barclays, you could invest your hard-earned cash in a burgeoning small cap. Riskier – but more interesting, with the potential for bigger returns.

Birley adds:

Our aim is to find interesting opportunities for investors; unfortunately, equity investment is not flavour of the month at the moment. Brexit hasn’t really affected us, but investors are opting for bonds which are the best way of financing now. However, along with trading venue Bats we are fully supportive of those companies keen to drive down the cost of data.


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