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The London Stock Exchange's consultation document published today to revise and expand the Nominated Adviser Eligibility Criteria and provide AIM with a standardised set of Nominated Adviser (Nomad) rules will help tighten market practices at the edges and allow the market to effectively discipline Nomads where needed, according to Grant Thornton Corporate Finance.
The consultation paper clearly sets out new norms to regulate a Nominated Advisers' conduct in respect of its client engagement, market admission and ongoing responsibilities. Some of the proposed new measures include:- reinforcing due diligence requirements to be undertaken by the Nomad into an issuer and its board
- strengthening the principle that a Nominated Adviser should take responsibility for managing the whole process of an AIM admission
- reinforcing the Nomad's responsibility to maintain regular contact with its clients and full awareness of a clients' ongoing market activities
"This consultation document formalizes what a good nominated adviser should already be doing", said Philip Secrett, partner at Grant Thornton Corporate Finance.
"The new AIM rules for Nominated Advisers will tighten market practices, getting everyone to conform and play by the same rules. While the vast majority of Nomads already comply with these measures as a matter of course, some firms operating at the edges will probably have some work to do".
"What a standard rule book will also do is improve accountability and allow the Exchange to crack down, where and if necessary, but far more effectively, on those Nomads that do not abide by the code. The current Nomad obligations have are very general and open to too much interpretation for the Exchange to pursue specific cases", continued Secrett.
"The expectation is not for AIM to turn into an SEC and pursue dozens of cases, but thanks to a formalized set of rules, the market will have clearly defined markers to ensure that best practice is applied by all".
"By the time this consultation document becomes standard practice, we will also be more likely to witness a far more regular influx of foreign Nomads being authorised to operate on AIM. As the market seeks to replicate its success around the world by nurturing investor communities that can use AIM as a platform, the role of a Nominate Adviser based overseas will prove crucial to act as a catalyst for the market's long-term development", he concluded.
