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The London Stock Exchange today announces the establishment of a new service to offer equity research on smaller quoted companies. PSQ Analytics, as the venture will be called, will be available to companies on AIM as well as smaller companies on the Main Market, and will provide information that improves investor understanding of their businesses.
The new service coincides with the start of a consultation on other measures aimed at boosting liquidity in the shares of smaller companies. The Exchange will be consulting member firms on measures it could take to improve price formation and liquidity provision for smaller companies. Under consideration are changes to market making obligations, the costs associated with market maker registration as well as the reduction and possible removal of reporting fees in less liquid equity securities on the Main Market and AIM.
The research service is being established by the Exchange for the benefit of the market. Three research providers – Argus Research based in New York, Independent International Investment Research Plc based in the UK, and Pipal Research based in Chicago – will work together to produce standardised, high quality, cost effective equity research in accordance with an agreed template. The three providers all have a strong track record of providing objective research across a wide variety of sectors.
The research will reach the widest possible audience of investors, free of charge, with distribution provided initially via Bloomberg, Thomson Reuters and a dedicated web portal.
Martin Graham, Head of AIM and Director of Equity Markets, said: “Over recent years, AIM has become established as the world's premier growth market. Across AIM and the Main Market, the Exchange supports a huge diversity of smaller companies that are competing to attract investor interest. Equity research is a key tool to allow them to get their message heard.
“The market feedback we have received demonstrates that there is huge value for companies in this scheme. By paying for research to complement the services already provided by brokers and other research firms, companies can increase visibility and understanding of their stock, leading to a wider investor base and ultimately enhanced liquidity.
“This is why we are delighted to be launching this initiative with 3 highly regarded research suppliers - Argus, IIR and Pipal. We are also pleased to be supported by the two largest data vendors in the world, Bloomberg and Thomson Reuters, who will distribute this data.”
Further details of the scheme include:- Equity research provided through PSQ Analytics is expected to cost a company in the region of £10k per annum, opening up research to companies for whom current market offerings are often not economic.
- Companies will be allocated one of the three providers on a pre-determined allocation basis to ensure the impartiality of the research.
- The research will consist of comprehensive factual information and analysis. It will not be investment advice and will not make recommendations.
- The research providers have agreed to share common methodologies and produce reports that follow a uniform presentation format, in order to facilitate cross-company and cross sector comparisons by investors.
- The full PSQ Analytics service is scheduled to launch fully in the autumn.
- The service will be entirely optional for smaller quoted companies on both AIM and the Main Market although we expect take up of the service to be good. The target audience covers more than 1,000 companies.
- The Exchange is setting up the scheme for the benefit of the market and will not be taking any revenue from this service. The Exchange’s role will be to provide marketing support and facilitate the widest distribution of the research.
