The London Stock Exchange has today issued a consultation notice which creates a framework for third party trading platforms to trade AIM securities while ensuring the maintenance of AIM’s high regulatory standards.
While AIM itself falls outside the scope of MiFID transparency rules, the Exchange considers it imperative that equally high standards of transparency and regulation are maintained for the trading of AIM securities as for the Main Market.
Adam Kinsley, Director of Regulation at the London Stock Exchange, said:
“Maintaining the regulatory integrity of AIM is central to the quality of the market and the reputation of AIM. These proposals will provide clarity on how other trading venues might provide a trading service in AIM securities, and should assure the market that allowing a choice of trading venue will not be accompanied by any degradation in the flow of information from AIM issuers to investors.
“While AIM is not covered by the post-trade transparency requirements of MiFID, the Exchange takes very seriously its responsibilities as the primary market regulatory authority for this market and will continue to insist on the highest standards of post-trade transparency and issuer regulation for AIM trading.”
In summary, a third party trading venue will be able to apply to become a Primary Market Recognised Organisation and/or a Secondary Market Recognised Organisation. The main distinction between these two types of trading venue is that the former will have its own formal relationship with the AIM issuer and thereby have the ability to enforce its own proper market in those securities.
An AIM Secondary Market Recognised Organisation, in admitting an AIM security to trading without having a formal regulatory relationship with the issuer, will be entirely reliant upon the Exchange’s regulation of the issuer under the AIM Rules. Such a trading venue will need to maintain appropriate gateways to communicate freely with the Exchange on regulatory matters and establish practical operational mechanisms to enable the provision of comprehensive real-time trading information in AIM securities to the Exchange.
