AIM To Get New Rule Book

This week, the LSE has been hot on the heels of everyone involved with Aim, particularly the nomads (nominated advisers) – making sure everyone knows exactly what is expected of them.

The first rule book to be published will set out crystal clear instructions about the nomad’s increased responsibility they face when bringing companies to market – the knock-on effect of this is that it will make it easier for the regulator to punish brokers if they slip up.

Although Martin Graham, head of Aim, says: “The LSE has not gone down the road of legislating for zero failure, reminding the world that the junior market specialises in risk capital. It was up to the nomads to act as both gatekeepers and policemen.”

Things aren’t so easy for a nomad when a company is joining the market from overseas – they must have an adequate knowledge of the business, taking into account its country of incorporation and operation. In each case the nomad must have their own specialist or bring one in from outside – this is just one of the rules contained in the new book.

The new rule book will create a need for more documentation and an inevitable increase in costs – but hopefully better qualities of companies listing on Aim. The stock exchange will also need to increase the number of staffing in its regulatory team by 50%.

Nomads will find themselves checking over their shoulders more often, as the exchange plans to step-up compliance visits – they will be asked to supply some of the information in advance, and visits will last a few days – this will make compliance officers jobs tougher – as brokers and traders hate nothing more than doing administration – and I know that for a fact!

Although a pain for nomads the new Aim rule-book should allow for more transparency in the quality of companies joining Aim – which will definitely benefit the private investor, who will always receive the highest protection from the regulator.

All the same, it’s been two years since a nomad has been publicly fined, and there have been a few other bad stories besides – but there is no escaping the fact that there are now more companies listed on Aim than the on the main market – and that in itself tells a great deal!

Until next time,

Melissa Carroll
for The Penny Sleuth