LONDON (Reuters) - The London Stock Exchange said on Monday it was to launch a research service aimed at boosting the liquidity of smaller stocks on its junior and main market, and would consider dropping reporting fees to aid this.
The formation of PSQ Analytics, the new research service, comes as the LSE begins a consultation on other measures to improve market making and liquidity on its AIM market in the face of tough competition.
Fairfax equity corporate finance head Adam Hart agreed that lowering the cost of trading would lift liquidity.
London-based PLUS Markets Group PMK.L, for example, offers a lower reporting fee and does not charge trading fees to attract small and mid-cap stocks.
The LSE (LSE.L) is considering changes to market-making obligations, to the costs associated with market maker registration and a reduction in — and possible removal of — reporting fees of non-electronic trades in less-liquid stocks on AIM and its main market.
The LSE currently charges 6p for each off-order book, or non-electronic, trade.
“By paying for research to complement the services provided by brokers and other research firms, companies can increase the visibility and understanding of their stock, leading to a wider investor base and, ultimately, enhanced liquidity,” Martin Graham, head of AIM and director of equity markets, said.
“The market feedback we have received demonstrates that there is huge value for companies in this scheme.”
Each company will pay 10,000 pounds a year for the service.
AIM is home to 1,675 companies which have raised some 57.6 billion pounds since it launched in 1995.
Between January 1 and April 30 this year, 41 companies raised 364.5 million pounds, down 78.5 percent on the same period in 2007 due to a global financial crisis.
New York-based Argus Research, UK-based Independent International Investment Research Plc and Chicago-based Pipal Research will produce free standardised research to investors via Thomson Reuters, Bloomberg and a dedicated web portal.
Set to launch fully in the autumn, the service will consist of factual information and analysis, but no investment recommendations.
The LSE, due to report annual results on Thursday, said late on Friday it bought back 3,500 shares at 1090p each.