PLUS Markets Group (“the Exchange”) has filed an action in the High Court (Queens Bench Division, Commercial Court) challenging a London Stock Exchange plc (“the LSE”) rule on AIM trading, which currently has the effect of preventing trading in AIM securities on markets other than the LSE.
PLUS’s submission to the Court contends that this rule, which requires trades conducted on venues other than the LSE to be reported to the LSE, is unnecessary and disproportionate, representing an abuse of the LSE’s dominant market position. Trading in AIM securities was not included in the provisions of MiFID. However PLUS argues that given the new ethos of competition and choice in this marketplace, this rule is archaic, anti-competitive and outside the spirit of MiFID.
At present there are around 1,600 AIM securities regulated by and traded on the LSE. Of these, some 90 AIM companies have also elected to be dual-traded on PLUS, and the Exchange routinely attracts up to 50% of their combined liquidity. This market share in AIM stocks is in the context of more substantial inroads being made by PLUS into the wider UK market in small and mid caps, as well as larger securities.
PLUS is disappointed that HM Treasury have not been able to realise plans to liberalise trading in AIM securities and the recent outage at the LSE particularly highlights the need for an alternative. In order to meet urgent demand from its customers for AIM trading, the Exchange is therefore progressing the creation of a new market, known as “PLUS-Europe”. PLUS-Europe will offer an attractive venue for the trading of all AIM securities from launch.
PLUS-Europe will be offered to trading participants in London in conjunction with Bayerische Borse AG, the operator of the Munich Stock Exchange, under the fully competitive regulatory environment already in place in Germany. PLUS-Europe will deploy the pan-European passport rights afforded to Market Operators under MiFID.
The LSE trading rule which PLUS today challenges would prevent member firms of PLUS-Europe that held dual-membership of the LSE from executing trades in AIM securities under its rules. Given the anti-competitive effect of the LSE rule, the Company has issued proceedings in the High Court in order to obtain, among other things, a declaration that the rule is null and void or otherwise unenforceable.
Jamie Whitehorn, PLUS Market’s General Counsel, said “We believe investors should be able to benefit from a competitive trading environment in AIM stocks in exactly the same way they are now benefiting from competition in the listed securities markets. PLUS believes that this LSE trading rule is unnecessary and disproportionate and the burden of demonstrating otherwise rests with the LSE. Consequently, it is PLUS’ case that the rule represents an abuse of the LSE’s dominant position. We are determined to offer execution services in AIM securities and we look forward to offering investors full competition and choice via PLUS-Europe.”
