Rules have been put in place to facilitate competition. Players are piling
into the market and, at the same time, credit lines to businesses of all kinds
are all but totally paralysed, as are most other forms of borrowing.
Meanwhile, listing, as a form of raising cash, is less popular than it has
been for years. Even the private equity houses are in suspended animation. But
there are still companies looking to grow and to raise money.
This is where
‘junior’ stock market, has a golden opportunity to drive its mandate to
provide affordable liquidity for European small and mid-caps.
The advent in November 2007 of the Markets In Financial Instruments Directive
(Mifid) aimed at harmonising the regulatory regime for investment services
across the 27 member states of the European Union and opening it up to
competition did a lot of good work: Plus is one clear beneficiary of this.
In 2008, it worked hard to exploit this and prove the viability,
transparency, accountability and geographical reach of its platform,
establishing a raft of joint ventures and alliances with equal numbers in Europe
such as the Munich Stock Exchange, and in Asia-Pacific through the New Zealand
In November, it signed an agreement with Washington DC-based Direct Edge, the
US’s fourth-largest centre for US equities which is in the process of converting
into an SEC-regulated stock exchange, to work together in the future.
In chief financial officer Nemone Wynn-Evans’s mind, 2008 was a year to
celebrate for Plus. ‘Mifid has fundamentally redefined the way securities are
bought and sold across Europe – there is a myriad of platforms trading
securities now,’ she says.
‘There is a huge amount of change and things are very fast moving in our
industry; we are going through a process of deregulation and competition.’
There are few other places you might imagine Wynn-Evans to be, given her
obvious passion for the Plus raison d’etre. She left the London Stock Exchange
in 2004, joining fellow defectors Cyril Theret and Alternative Investment Market
head and co-founder Simon Brickles for what was then a smaller, family-owned
The trio formed the decidedly zippier executive board that replaced the
well-respected Jenkins family, to re-create and recapitalise the company as
Expecting her first child in March, and conducting the business half the time
in London and the other half from her home in the Midlands, Wynn-Evans’s role is
probably the fullest of any in the FTSE 250, comprising the CFO role (full-time
since September, interim since April 2008), and heading up the investor and
media relations functions – and she isn’t a qualified accountant.
‘It’s all rather exciting and new. I’ve got no easy answers,’ she says to the
question of how such a demanding job can be balanced with first-time motherhood
and a long commute.
‘I have been running teams from home for the past four years, so I’ll scale
down and back up when I need to.
I will still be dialling into meetings and writing board papers and serving
as CFO,’ she maintains. ‘I’m aware it is quite unusual for CFOs to also occupy
the communications function. It takes a particular type of person, put it that
Her commitment to the Plus concept is clear: she is taking on the LSE’s Dame
Clara Furse and the City establishment to remove the last road-block to becoming
cash-generative in 2009, as it has said it intends to be: Plus reported a £2.4m
loss in its September 2008 interim statement, alongside revenues of £1.6m for
The company is pursuing the London Stock Exchange through the High Court to
remove the right LSE’s rulebook gives it to require all trades of securities
listed on its markets, but executed anywhere else outside the LSE, to be
reported to it. Plus believes this has the effect of preventing trading in Aim
securities other than the LSE, and thinks it an abuse of a dominant position in
the listings market.
LSE denies the rule effectively prohibits member firms from executing trades
in Aim securities on Plus, and has taken a pop at Plus’s alliance with the
Munich exchange, saying it ‘circumvents the FSA’s regulatory regime’ and
‘deprives Aim companies of any say in where their shares are traded.’
Wynn-Evans argues that companies don’t have a say in that matter anyway and
that the venture, allowing dual-trading of Aim securities under the German
regulatory authority and Mifid, was launched to get around what it sees as a
critical hindrance by the LSE of its objectives.
‘Because of its status, Aim wasn’t caught by Mifid, so while free trading
without encumbrance is possible for main market securities, it isn’t possible
for securities on Aim as they are not governed by Mifid,’ Wynn-Evans says. ‘Our
view is that there is no difference between the trading of a large-cap share and
the trading of a small-cap share. But because of the legacy infrastructure
relating to Aim, those provisions don’t apply. There are some circumstances in
which we can trade Aim securities, but they’re very restrictive.’
A place in history
She expects the challenge to reach trial in the second half of 2009: a ruling
in her favour would be as historic for the City and for the LSE as it would be
The fight is critical to both Plus’s financial future and its reputation.
Plus has spent its four-year existence shuffling off the legacy of Ofex’s
reputation, or lack thereof; Ofex was not always taken seriously as a junior
stock exchange and never touched the strength of the Aim brand. Plus is working
to change City perception, but many still see Aim as the logical home of the
‘It might be true to say that it takes time for perceptions to shift when an
industry structure shifts,’ says Wynn-Evans.
The CFO notes the number of new entrants to its market space in last couple
of years, including BATS Europe, Turquoise, whose owners include Morgan Stanley,
Societe Generale and UBS, and Nasdaq Europe. Wynn-Evans hopes recession will
make companies study their options to seek the best deal for a first time or
dual listing – not just go to the safest, biggest brand.
‘As to whether the LSE retains a standing over and above us, bearing in mind
we are both recognised investment exchanges in the UK and have identical
regulatory status – I guess that will be up to the High Court to decide.’
This article orginally appeared in the January edition of our sister
Plus vs the LSE
As Plus battles against the
Exchange across several fronts, the LSE has reported a 13% fall in trading
revenue in the UK and Italy, saying that market conditions remain ‘very
difficult and uncertain’.
But strong performances from its clearing and information services division
and near-record levels of equity raising saw the LSE post a 4% climb in revenues
for the three months ending 31 December 2008 at £171m, compared to a year
New issues remain a worry for all markets, and the LSE saw big falls across
all its platforms.
Main market issuers fell to just 12 in the final quarter of the calendar
year, from 34 a year earlier. AIM greeted 22 new issuers compared to 67 across
the same period a year before. The Borsa Italiana saw just one issuer compared
The total amount of new capital raised on the exchange’s markets in the three
month period was £29.7bn (2007: £12.1bn).
While new issue activity remains at very low levels, prospects for secondary
issues appear good.
‘Benefits from the integration with Borsa Italiana are being delivered,
development of new products continues and underlying operational costs are being
tightly controlled,’ the group added in its latest trading statement.
‘Capital raising on our markets in the UK has been strong with a near record
in terms of money raised in the quarter, and, while new issues remain subdued,
we are seeing a continued flow of secondary issues,’ said LSE CEO Dame Clara
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